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UNIVERSITY 

OF CALIFORNIA 

LOS ANGELES 



SCHOOL OF LAW 
LIBRARY 




au' Xcrtuvw -1875-6. 



THE 



LAW OF MORTGAGE IN INDIA. 



BY 



EASHBEHARY GHOSE, M.A., 

TAGORE LAW PROFESSOR. 



CALCUTTA : 
THACKER, SPINK AND CO., 



tfjr Calcutta (Llni^rrsttg. 

MBAY : THACKER, VINING & Co. MADRAS : HIGGINBOTHAM & Co. 
LONDON: W. THACKER & Co. 

1877. 




CALCUTTA : 
BT THACKEB, BPINK AND CO. 



TABLE OF CONTENTS. 

Page. 
LECTURE I. 

Early notions of security Real security, a development of mature jurispru- 
dence Short historical sketch of Roman law of pledge Similar notions 
traceable in early Hindu and Mahomedan law Classification of securities 
by Roman lawyers Rights of pledger and pledgee in Roman law, and 
in systems founded upon Roman law Mortgages of land in England 
Rights of mortgagor and mortgagee Influence of civil law ... 1 

LECTURE II. 

Hindu and Mahomedan law of mortgages Hindu law Early notions of pledge 
Tradition originally essential to validity of pledge (Shib Chunder 
Ghosc v. Itmsick Chunder Ncogy) Pledgee had in early times only 
a right of detention Foreclosure, and power of sale, innovations Classi- 
fication of securities by Hindu lawyers Rule requiring tradition gradually 
fell into disuse Possession still important when any questions touching 
priority arise Text of Brihasputty "Equity of redemption" Sale by 
judicial process Beneficial pledge, and pledge for custody Important 
distinction between the two Right of pledgee to sue when pledge ia 
destroyed without his default Analogous rule in Code Civil Rule of 
Hindu law, interest not to exceed principal Influence of rule on Hindu 
law of pledges .24 

LECTURE II. ( Continued.) 

Mahomedan Law of Mortgage Difference between Mahomedan Law and Hindu 
and English Law Rahn, literally detention Pledge invalid unless followed 
by transfer of possession Things capable of being pledged Those of which 
possession could be delivered Things which could be sold, but of which 
possession could not be given, could not be pledged Opinion of Shafei 
Pledge for contingent debt Liability of pledgee for loss or destruction of 
pledge Interest unlawful Influence of rule in retarding development of 
law of pledge Qualified power of sale Must be given by contract itself 
Bye-bil-waffa, a comparative modern innovation Conflicting opinions of 
Mahomedan lawyers as to its legality Opinion of Mahomedan law officer 
in Bussunt Ally's case Recognition of validity of Bye-bil-waffas in India 
Gradual recognition of hypothecation Probable influence of Hindu law 
Xo distinction between pledges of land and pledges of moveables Move- 
ables, originally the subject of pledge Gradual extension of pledge of 
land Hypothecation 49 



JV TABLE OF CONTENTS. 

LECTURE III. Page. 

Conventional mortgages Different kinds of Simple mortgage Conditional 

sale Usufructuary Otti of Madras GaJtnn lahen of Bombay Mortgage 

how created Writing not essential Effect of Registration laws Parol 
defeasances inadmissible Mortgage by deposit of title-deeds Equit- 
able mortgage in English law Memorandum True nature of Registra- 
tion Proper subjects of mortgage General hypothecation invalid 
Capacity to mortgage Right of mortgagee to accessions Rights of 
mortgagor and mortgagee when pledge assumes a different form 
Syjnath Lull v. Bam din ( hcirdhnj Power of sale in Mofussil mortgages 
Bhowani Churn Matter's case . . 62 

LECTURE IV. 
SIMPLE MORTGAGES. 

What constitutes simple mortgage Conflicting dicta Nature of security 
possessed by simple mortgagee How made available Decree for sale 
What passes under such decree Rights of puisne encumbrancer Haran 
mder Ghcte against Diimlnnxlhu Base Law of execution Practice of 
Continental Courts Effect of clause against alienation in mortgage deed 
Lit pendent Mortgagee not bound to proceed against pledge May waive 
his rights as mortgagee Sale of property "subject to mortgage" 
Sec. 271 of Act VIII of 1859 Sec. 270 how construed Right of simple 
mortgagee, a real right Defence of purchase for value not available 
Period within which security must be enforced Court in which mort- 
gagee must sue Conflicting decisions on the point 98 

LECTURE V. 

Conditional sales Differences in form between conditional sales and English 
mortgages Difference between mortgages by conditional sale and sales 
with clause for repurchase Mortgagor does not generally incur any per- 
sonal liability Construction of the Sudder Dewany Adalut True meaning 
of " construction" Implied warranty of title by mortgagor Remedy for 
breach of warranty Remedy of mortgagee when pledge is accidentally 
destroyed Principle on which damages should be assessed Right of 
mortgagee to prevent waste when security is insufficient Reg. XVII 
of 1806 Process of foreclosure in Bengal Meaning of " stipulated period," 
iral representatives" Duty of Court on receiving application 
lation mandatory and not merely directory Distinction 
between mandatory and directory enactments Proceedings under Regu- 
! Uvular suit Process of foreclosure elsewhere 

than in B'i)}.'.-< i on tin- ]>ract ice of the English Court of Chancery 

mortgagee to possession imiiu -diatcly on default How far 
in IW>ngal by Regulation XVII oi 1806 Limitation Acts XIV 
of l-si'J and IX of 171 .... 134 



TABLE OF CONTENTS. V 

Page. 
LECTURE VL 

Equity of redemption Origin of expression Position of mortgagor before 
foreclosure Right to redeem Bengal Regulation XVII of 1806 Recog- 
nized by Courts of Justices in other Provinces Opinion of the Privy 
Council Pnttaveramier v. Vencatta Rom Naiker " Once a mortgage 
always a mortgage" Meaning of maxim Persons entitled to redeem 
Regulation XVII of 1806 Practice of English Courts of Chancery 
Mortgage security indivisible Effect of mortgagees purchasing portion 
of mortgaged property Contribution Redemption under Bengal Regu- 
lations Deposit or tender What a good deposit Rnkca Begum v. Pran- 
natli Roy Chorvdry Time within which deposit must be made Practice 
in Bombay and Madras Limitation Acknowledgment Effect of acknow- 
ledgment by one of several mortgagees Difference between English 
Statute and Indian Act 184 



LECTURE VII. 

Usufructuary mortgage What constitutes usufructuary mortgages Personal 
liability of mortgagor Zuripeshgee leases Difference between Zuripesh- 
gee and ordinary leases Hanuman Persad Pandey's case Origin of 
Zuripeshgee leases Rights and liabilities of usufructuary mortgagee 
before and after repeal of Usury Laws Liability to account Right of 
redemption of mortgagor Simple usufructuary mortgagee not entitled 
to decree for sale Limitation 218 



LECTURE VIII. 

Liability of mortgagee in possession to account Regulation XV of 1793 
Meaning of " gross receipts " Mortgagee not competent to create middle- 
men Allowance for expenses of collection Practice of our Courts 
Nature of accounts which mortgagee is bound to produce Verification 
of accounts Right of mortgagee to interest not exceeding 12 per cent. 
Shall. Makhvn Loll v. Sreekwsen Sing Liability of mortgagee since Act 
XXVIII of 1855 Zuripeshgee leases Allowance for necessary repairs 
Improvements how far allowed Payment of Government revenue Mode 
of taking accounts Liability of mortgagee after notice of subsequent 
encumbrance Mortgagor not liable to account Mortgagee not a trustee 
for mortgagor Wassilat distinct from usufruct Mortgagee chargeable 
with occupation rent Suit for redemption Practice of the Courts in 
Bengal Procedure in such cases elsewhere . 



i TABLE OF CONTENTS. 

Page, 
LECTURE IX. 

Liens Legal and Judicial Distinction between Statutory liens Regulation 
VIII of 1819 and Act VIII of 1869 (B.C.) Act XI of 1859 Salvor's lien- 
Lien of oo-aharer for revenue paid by him Unpaid vendor's lien Mackreth 
T. Symmont What constitutes waiver of lien Objections to legal liens 
Registration Purchasers without notice Practice of English Court of 
Chancery Purchaser's lien Lien of partners and agents Tenants in 
common No lien for dower in Mahomedan law None in favor of credi- 
tors on assets of deceased debtor in Hindu or Mahomedan law Judicial 
lien Attachment before and after judgment Operation of Sec. 240 
of Act VIII of 1859 Alienation by debtor not absolutely void Anund 
Jiohun Dau against liadha Mohun Shah Striking off attachment Effect 
of Puddomoney against Roy Mothuranath Choicdhry . 265 



LECTURE X. 

Subrogation Application of rule Rights of puisne incumbrancers Rights 
of surety Entitled to benefit of securities held by creditor How far 
discharged by relinquishment of security Security not relinquished by 
payment Rule of English law Followed in India Co-debtors How far 
entitled to benefit of securities Purchasers of mortgagor's rights redeem- 
ing a mortgage, how far entitled to benefit of subrogation Other cases 
illustrative of the rule Contribution Principle on which founded 
Doctrine followed in India Marshalling of securities Rule of English 
law Adopted by our Courts Distinction between purchasers and incum- 
branceiB Notice immaterial in the case of a mortgage .... 285 



LECTURE XI. 

Pledge of moveablen Paucity of authority Contract Act Definition of 
pledge Validity of hypothecation of moveables Danger of fraud 
Distinction between a pledge and a mortgage of chattels Power of 
ale Pawnee's lien extends to interest and necessary expenses Extra- 
ordinary expenses Right of pawnee to tack subsequent advances Rule 
of English law Right of pawnee to make use of pledge Degree of 
tfence imposed on pawnee Differences between Indian law and English 
and Roman law on the point Pawnor's right to accessions Right of 
redemption Passes to the legal representative Possessory heirs General 
and special Unpaid seller's li.-n May be waived Right of resales 
Differences between Imliun ami English law Lien of artificers Banker's 
and attorney's lien for general balance of account ..... 



TABLE OF CONTENTS. vii 

Page. 
LECTURE XII. 

Extinction of securities Consolidation Merger of debt Right of prior mort- 
gagee how far extinguished Rule of Roman law Doctrine of English 
Court of Chancery Conflicting decisions in India Extinction of security 
by discharge of obligation Novation Substitutionary and cumulative 
Extinction of security by destruction or sale of pledge or prescription and 
renunciation Priority Generally determined by order of time How 
affected by registration Notice immaterial Priority how far affected by 
possession Rule of Hindu law Privileged liens Salvor's lien Tacking 
Extent to which recognised in Roman law Doctrine of English law 
Origin of doctrine Not followed in India Consolidation of securities 
Rule of English law Partial recognition by our Courts Mortgage to 
secure future advances How priority is forfeited Fraud, actual or con- 
structive, of mortgagee Laches Effect of allowing title-deeds to remain 
in custody of mortgagor Allowing mortgagor to receive rents after 
notice of incumbrance Deeds of further charge Practice in India Waiver 
of security not presumed IAS petitions Application of doctrine in relation 
to priority of securities 315 



LECTURE I. 



Early notions of security Real security, a development of mature 
jurisprudence Short historical sketch of Roman law of pledge 
Similar notions traceable in early Hindu and Mahomedan law Classi- 
fication of securities by Roman lawyers Rights of pledger and 
pledgee in Roman Law, and in systems founded upon Roman law 
Mortgages of land in England Rights of mortgagor and mort- 
gagee Influence of ci vil law. 

THE history of archaic institutions shows how 
very slowly the most familiar juridical conceptions 
of the present day have been matured. Few per- 
sons, I venture to affirm, would think of question- 
ing the truth of this assertion at the present day ; 
and yet even a slight acquaintance with juridical 
literature will show that it is only recently that 
wild speculation and rash assertion have given place 
to sober reasoning and careful observation. Com- 
parative jurisprudence in a few short years has 
accomplished many striking results ; but not the least 
important of these, is the dissipation of the delu- 
sions which once clustered round the e,arly history 
of law. Experience, however, tells us that specula- 
tive errors possess remarkable vitality; and it would 
be rash to suppose that delusions once so common 
have wholly died out in our time. The tendency to 
confound the earlier stages of law with its maturity 



2 HINDU WILLS. 

is by no means uncommon even at the present 
- clay; and the warning cannot be given too soon, nor 
repeated too often, that it is only by a careful 
study of the gradual development of legal concep- 
tions, that we can guard ourselves against mis- 
takes into which we should otherwise be almost 
sure to be betrayed. In common with the class 
to which they belong, the delusions of which 
I speak point to modes of thought from which we 
cannot emancipate ourselves without a conscious 
effort of the mind. We find it difficult to realize the 
intellectual condition of society in its infancy, and 
are frequently betrayed into transferring to archaic 
law conceptions which find a place in some of the 
latest improvements in jurisprudence. The history 
of the Hindu Will furnishes us with a case in point. 
I do not mean to deny that testamentary succession 
was known to the Hindu law; but there can, I think, 
be no reasonable doubt, that we owe the recognition 
of the institution by English lawyers to the sup- 
posed analogy between a gift and a bequest The 
analogy may be very close or merely fanciful. That 
i> a question which I do not propose to discuss. My 
object in calling your attention to the topic is 
merely to point out that an examination of archaic 
institutions shows, beyond the shadow of a doubt, 
that testamentary succession belongs to a range of 
i(1 <' much in advance of that which permits 

the owner to make a gift of his property during 



EARLY NOTIONS OP PLEDGE. 3 

liis life; and that in no system whatever has the law LECTURE 
regulating wills grown out of, although it may have 
sometimes shaped itself on the model of, the rules 
touching gifts during life. 

I trust I have said enough to make it unnecessary 
for me to insist on the interest which attaches to 
the early history of those legal conceptions which 
we see only in their maturity. We may not in 
every case be able to trace the outlines distinctly; 
but the assertion may be hazarded without rashness 
that there is not a single juridical conception which 
may not be historically examined with advantage. 
A few words therefore on the origin and growth of 
the law of securities, the immediate subject of the 
present lectures, will not, I trust, be thrown away. 

A learned writer on the law of mortgages has 
said that pledges must have come into use as soon as 
the rights of property were recognized. This 
assertion, however, must be received with consider- 
able reserve. It is true that pledges were known 
to early law, but the conception when it first shows 
itself is marked by the crudity peculiar to the 
infancy of jurisprudence. 

Let me pause here for a moment to explain 
that, according to modern notions, the very essence 
of a security is the right of the creditor to obtain 
satisfaction, wholly irrespective of the ability 
or willingness of the debtor. If the debtor make 
default, the creditor may either sell the property 



4 SURVIVALS IN ENGLISH LAW. 

ami repay himself out of the purchase money, 
or the pledge is forfeited to him in satisfaction 
of his demand. The debtor may be obstinate 
or unable to pay, but the creditor can always 
obtain satisfaction out of the property pledged to 
him, and is therefore wholly independent of the 
debtor. It is, however, only in the maturity of 
jurisprudence that the pledgee acquires this right; 
a rii^ht wiliich is justly regarded as the very per- 

iion of a security. In the infancy of law, a 
pledge was only regarded as a means of compelling 
{satisfaction. The creditor, by detaining the pledge, 
might compel the debtor to fulfil his engagement; 
but beyond the pressure which the pledgee was 
thus in a position to put on the pledger, the creditor 
could not turn his security to account. In other 
words, a pledge only operated on the will of the 
debtor. The creditor had no authority to sell the 
pledge, nor was it ever forfeited to him in discharge 
of his demand. 

Modern law furnishes us with an instance of a 

it closely resembling the right of the pledgee in 
ancient law. English lawyers have frequently 
poinn-d out the unsatisfactory character of what is 
called a -possessory lien" in English law, a bare 

ut of detention unaccompanied by any power of 
sale or foreclosure. It is no doubt an anomalous 

bt; and the true explanation of the anomaly lies 
in the fact that it is a mere " survival." We have 



HISTORICAL EXAMINATION OF ROMAN LAW. 5 

here an instance, by on means exceptional, in which a LECTURE 
conception, distinctly archaic, is found to linger in 
a system which has shown no mean capacity for 
expansion with the multiplying wants of an active 
commercial age. 

I have said that in ancient law a pledge was 
regarded simply as a means of extorting satisfaction, 
and that the powers of sale and foreclosure with 
which we are so familiar at the present day are 
improvements which are only found in mature juris- 
prudence. I shall now ask you to test the sound- 
ness of the conclusion by an examination of a sys- 
tem of law which, while it has powerfully affected 
in its maturity the institutions of the greater part 
of the civilized world, is perhaps also the only sys- 
tem which possesses a continuous history of this 
branch of jurisprudence. I allude to Roman law. 
The evidence furnished by the Hindu and Mahome- 
dan law is less authentic, and has to be approached 
with very great caution. I hope however to be 
able to show in the next lecture, that there are 
passages as well in our own law as in the Mahome- 
dan law, which fortify, in a remarkable manner, the 
conclusions suggested by an historical examination 
of the Roman system ; passages which can only be 
explained on the hypothesis that a real security, a 
security which makes the creditor wholly indepen- 
dent of the debtor, finds its place in every system 
among the latest improvements in jurisprudence. 



REAL SECURITY. 



i.t:. run 



law. 



F.r the present I shall confine myself to the Roman 



I have not paused to explain with sufficient clear- 

I the meaning of the words " real security," an 

ression which I have already used more than 

once. A real security is a security in which the 

creditor possesses the right to satisfy his demand 

out of the property pledged to him, and must be 

raivi'ullv distinguished from a real right, which, 

as I shall have occasion to explain more fully 

hereafter, is simply a right availing against the 

world at large, and not merely against a determinate 

]> rson or persons. A creditor may have a real 

it in property belonging to his debtor, and yet 

lie may not possess a real security. Thus, if any 

body should take out of my possession property on 

which I have a bare lien, I have a right to have the 

property brought back into my possession, but my 

if, the security not being real, does not extend, 

to Belling the property in satisfaction of my demand. 

The distinction is a very important one, and must 

:nlly borne in mind in the discussions in 

which we shall presently be engaged. 

n- now turn to the Roman law for the pur- 

naming the successive steps by which 

law of securities gradually matured itself. The 

subject has already been investigated by a living 

man jurist, and the results of his labours have 

-ible to English readers by Mr. 



FIDUCIA AND PIONUS. 7 

Justice Markby in his Elements of Law. (See the L 
Chapter on Securities in the Appendix to the Ele- 
ments of Law.) 

The earliest form of security known to the 
Romans appears to have been the Fiducia. This 
was a proceeding by which the debtor transferred 
to the creditor the ownership of the property which 
was intended to be given as a security; the creditor 
on his part agreeing to restore it to the debtor as 
soon as the obligation was fulfilled. If the debtor 
however made default, his right to the property 
was not extinguished. To use the language of 
modern law, the debtor possessed an equity of 
redemption, of which the creditor could not deprive 
him, either by sale or foreclosure. I shall pass over, 
for the present, the successive steps by which the 
Fiducia ultimately ripened into a real security, and 
proceed to discuss another mode of giving security ; 
which, although a later invention, was ultimately 
destined to replace the Fiducia in the jurisprudence 
of Rome. 

This was the " pignus" which, in its earliest form, 
was a proceeding by which the debtor transferred, 
not the ownership, as in the Fiducia, but the bare 
possession, to the creditor. The pledgee only pos- 
sessed the right of detention. Even this right, 
however, was at first extremely precarious. It was 
not protected by a real action, as the law refused 
to recognise a real right in the creditor. So long 



-'* ***V .* A W%V* * * ) ' 



IMPROVEMENTS IN THE ROMAN LAW OF SECURITY, 

as this was the case, land was rarely given in 
pledge, as the creditor had no remedy if the debtor 
made a fraudulent alienation. This was, no doubt, 
a very unsatisfactory state of things. The law, 
however, was insensibly developed by the Praetorian 
jurisdiction to which Roman jurisprudence is in- 
debted for so many reforms. Under the semblance 
of moulding the procedure of the courts over 
which they were called upon to preside, the Roman 
Tra'tors, by promising to grant a particular action 
or plea, remodelled almost every branch of the law, 
and owing to circumstances to which I shall pre- 
sently refer, the law of security seems to have 
claimed their attention at an early period. The first 
improvement was effected by a Praetor named 
S.-ilvius, who allowed the validity of a pledge, although 
not followed by a transfer of possession in the case 
of a tenant pledging his farming stock as security 
for the rent payable by him. This improvement 
was followed by the " actio serviana," which allowed 
the landlord to enforce his claim by a real action, 
unlettered by the somewhat inconvenient limitations 
by which the Tractor Salvius had sought to fence 
in the ri-ht of the landlord to follow the pledge 
into the hands of third persons. Originally confined 
to tin- security of the landlord on the farming stock 
it. the ri-ht was extended in course of 
""" t() : 'U ' e. s , whatever might be the 

of the property, and whether the pledge was 



IMPROVEMENTS IN THE ROMAN LAW OF SECURITY. 9 

accompanied by possession or not. The last LECTURE 
improvement was accomplished by the " quasi 
Servian action," which marks an important epoch in 
the history of the Roman law of securities. The 
jealousy with which archaic law guards the crea- 
tion of a real right has now been relaxed. A real 
right may now be created without delivery of 
possession, and the " substantial pledge has been 
refined into the invisible rights of a hypotheca." 

I have said that there were influences at work 
from without, which, while they hastened the deve- 
lopment of this branch of the Roman law, also 
determined, in a great measure, the direction of that 
development. 

" The most important improvements in the 
Roman law of security," says Mr. Justice Markby, 
" were not introduced until, by the extension of the 
Roman dominion beyond the confines of Italy, very 
large estates first became common. From this time 
large numbers of slaves, and even of free persons, 
began to be employed in cultivating these properties. 
Small estates also were sometimes let out to farm. 
Hence the necessity, that the landlord should have 
some security for his rent, became apparent at 
Rome, as it has in all places where the land of one 
person is cultivated by another. 

" Under the old law it was not easy for the laud- 
lord to obtain this security from the cultivator. 
Generally the only property which the cultivator 



10 uicnx OF SALE. 

had was his farming stock (invecta et illata); and 
1 it was obvious that this could neither be assigned 
to the landlord by a jiducia, nor given into his 
custody by a pignus. It was, therefore, necessary 
to devise some other means of effecting security ; 
and the mode adopted was, to allow the tenant by a 
simple agreement, without any formalities, to pledge 
his farming stock to his landlord as a security for 
the rent." (Elements of Law, 506, 507.) 

I shall now proceed to state the successive steps 
bv which the creditor gained a real security, which, 
as I have already explained, is very different from a 
real right. This was originally accomplished by 
the introduction of a clause expressly authorizing 
a sale upon default, a clause which appears to have 
been suggested by a right possessed by the State of 
selling laud pledged to it. At a somewhat later 
period, this right was presumed to exist in every 
pledge. The creditor thus acquired the right to 
. 15/e his money by the sale of the pledge; in 
other words, the creditor acquired a real security. 
The power of sale now came to be regarded as a 
'it inherent in the pledgee; or as a Roman lawyer 
:ild perhaps have said, one of the natural inci- 
dents of a pledge, and it was probably under the 
influence of this idea that the law at a later period 
permitted a sale even when the creditor had 
dy :i'_riv<-d not to exercise the power. 
have now readied the stage in which the law 



GRADUAL DEVELOPMENT OP THE FIDUCIA. H 

stood in the maturity of Roman jurisprudence. The LECTUBE 
bare right of detention originally possessed by the 
creditor has now been succeeded by a right of sale, 
which, as we have seen, could not be controlled 
even by the express agreement of the parties; 
while the somewhat cumbrous formalities which 
were originally necessary to the validity of the 
" pignus " (including the transfer of possession) have 
been replaced by a simple agreement of the 
parties. 

In giving an account of the Roman law of 
security, I did not notice, at the proper place, the 
improvements which took place in the Fiducia* 
The gradual progress of the Fiducia, from a bare 
right to compel the debtor to make satisfaction, to 
its latest improvements, when it ripened into some- 
thino; like the mort2:ao;e of the English law, or our 

O O O O ' 

own conditional sale, is not less interesting than the 

7 O 

development of the kind of securities which I have 
been hitherto considering. 

The first improvement was the introduction of a 
clause, by which it was agreed that the creditor 
should become, on default, the absolute owner of the 
property pledged to him. Such a covenant, however, 
if literally enforced, was likely to operate in many 
cases with considerable hardship upon the debtor ; 
and the stringency of the condition was relaxed by 
subsequent legislation. The default of the debtor 
was not immediately followed by forfeiture, and he 



]2 ABOLITION OF FORECLOSURE. 

LECTUHE was permitted to redeem, if he fulfilled his obliga- 

1 tion, within a reasonable time. The position of the 

creditor now became analogous to that of the Eng- 
lish mortgagee, and the conflicting rights of the 
pledger and pledgee were, to a certain extent, 
reconciled with justice and equity. Roman lawyers, 
however, could not bring themselves to accept such 
an imperfect reconciliation. It offended their sense 
of "elegance." A pledge, whatever might be the 
language used by the parties, was only a security 
for the debt, and the creditor was not m fairness 
entitled to anything more. In later Roman law, 
therefore, the creditor was not suffered to foreclose, 
but could realize his dues only by the sale of the 
property pledged to him. You will presently see 
that the English law is also slowly drifting to the 
same point. The power of directing a sale instead 
of a foreclosure., which used to be exercised so very 
sparingly by the English Courts of Equity, has been 
extended by a recent statute, while other indications 
are also not wanting that the total abolition of 
foreclosure is only a question of time. 

From what I have said, I think it is clear that a 
real security is the most perfect security. The 
history of the Roman law shows that it was only 
very slowly that the right of detainer, the only 
security recognised in early times, ripened into a 
1 security. An examination of Hindu and Maho- 
medan law also suggests the conclusion that a 



CLASSIFICATION OF SECURITIES IN ROMAN LAW. 13 

security in the infancy of law only operated upon LECTURE 
the will of the debtor. I shall, however, as I have 
already said, discuss this point in the next lecture 
when I propose to give a general outline of the law 
of security as it is found in Hindu and Mahomedan 
books. 

I shall conclude this part of my lecture with a 
few general observations on the Roman law of 
security, and I propose, in the first place, to call your 
attention to the three-fold division of securities by 
Roman lawyers, a division which although possibly 
open to criticism on logical grounds, is eminently 
convenient. 

Roman law divides securities or mortgages into 
three classes, conventional, legal, and judicial. A 
conventional mortgage is one created by the agree- 
ment, express or implied, of the parties, and calls for 
no remark. A legal mortgage is one which is 
created by the operation of the law. A legal mort- 
gage, however, must not be confounded with implied 
conventional mortgages, which are really based 
upon the voluntary consent of the parties, the dis- 
tinction between the two being precisely the same 
as that between implied contracts and quasi con- 
tracts. The judicial lien of the civil law is a lien 
created by an order of a Court of Justice for the 
purpose of compelling obedience to its orders, and 
corresponds to the process of attachment under the 
procedure of our own Courts. I do not wish to 



]4 RIGHTS OP PLEDGEE IN ROMAN LAW. 

discuss the various rules which governed each of 
these classes of securities ; such a discussion would 
be beyond the range of the present lectures. Much 
of our own law of mortgages is, however, still in a 
floating condition, and I shall, therefore, be obliged 
to refer occasionally to the Roman law on topics on 
which our own law cannot be said to be settled. A 
few general observations will, therefore, I trust, 
assist you in following me through some of the dis- 
cussions in which I shall be engaged in the course 
of these lectures. 

The pledgee possessed in later Roman law, as we 
have already seen, a right to sell the pledge, a right 
which might be exercised by him even if he had 
c-i imaged with the debtor not to sell the pledge in 
satisfaction of his demand. The creditor, however, 
was not at liberty to sell until his claim was fully 
due and payable ; and even then he was bound to 

e the debtor notice of his intention to sell. If, 
however, the creditor had expressly engaged not to 

rcise the right of sale, he was bound to issue 
three successive notices, instead of the one which 
was ordinarily required by the law. The pledgee 
\v;is not bound to invoke the process of the Court 
for the sale of the pledge; but the sale, in the 
absence of any express agreement to the contrary, 
nm>t have been effected publicly, and the debtor 
Miimnom-d to be present. The creditor, however, 
nt entitled to anything in excess of the 



RIGHTS OF PLEDGOR AND PLEDGEE. J5 

amount of his debt with interest, if any, and costs. LECTUUE 
If there was any overplus, the debtor was entitled to __1 
it, who, on the other hand, was not released from 
liability if the proceeds fell short of the demand of 
the creditor. The creditor, however, could not be 
compelled to sell, unless the debtor gave security 
for the payment of the debt in full ; but a fraudulent 
sale rendered the creditor personally liable to the 
debtor, and if recourse against the creditor was 
impossible, the purchaser might be compelled to 
make restitution. If no bidder offered a reasonable 
price, the creditor might himself obtain an assign- 
ment of the pledge for a fair price; such an assign- 
ment, however, did not extinguish the debtor's right 
of redemption. 

The debtor, before the exercise of the right of 
sale by the creditor, was not restrained from dealing 
with the property in any way he thought proper, pro- 
vided that the security of the creditor was not there- 
by impaired. The pledgee could not be affected by 
any disposition which the pledgor might make of 
the property pledged by him. The right of the 
pledgee was a real right, and could not be pre- 
judiced by any alienation made by the debtor. A 
sale by the creditor therefore passed the property to 
the purchaser free of all incumbrances subsequently 
created by the debtor. 

It would appear, although the point is not quite 
free from doubt, that the right of sale could be 



1(J PRIORITY OF INCUMBRANCES. 

LBCTURE exercised only by the first pledgee, and not by the 

second or any subsequent encumbrancer. It was, 

however, always open to the puisne pledgee to 
redeem the prior mortgagee, and thus acquire the 
ri -:lits of the latter. This right of redemption was 
not confined to the second mortgagee, but any 
mortgage creditor might place himself in the situa- 
tion of the first mortgagee by the payment or 
deposit of the amount of his demand. The princi- 
ple of the English law, however, by which a prefer- 
ence may, in certain cases, be gained over an 
intermediate incunibrance, was not recognised by 
Roman lawyers, although the mortgagor was not 
permitted to redeem without paying to the mort- 
gagee all the debts, whether secured or unsecured, 
which might be due to him from the mortgagor. 

Except in the case of privileged liens, the respec- 
tive priorities of incumbrances were determined 
according to the order of time. A privileged lien or 
pie. din 1 was one to which the law allowed priority upon 
equitable considerations over pledges older in date. 
l'.-r instance, the pledgee who, with an express stipu- 
lation for priority, lent money for the purchase of 
an e>tatr. <>r who advanced money for the repair 
of a buildin-. was entitled to priority over encum- 
brancers whose claims were older in date. There 
re sonic other privileged liens recognised by the 
law. but they do not possess much general interest, 
anil 1 need not. therefore, refer to them in detail. 



PLEDGES IN CONTINENTAL SYSTEMS OF LAW. 17 

Every thing which might be sold, could be LECTURE 
lawfully mortgaged. Property which could not be 
the subject of alienation, could not be the subject 
of mortgage. A mortgage might be either general, 
that is, it might include the whole of the property 
which the debtor possessed at the time of the 
mortgage, or which he might subsequently acquire ; 
or it might be special, that is, confined to some speci- 
fic property. A security might be given not only 
for the repayment of a debt, but also for other 
considerations. It might, for instance, be granted 
by the vendor of a property to the purchaser to 
indemnify him in case he should be evicted. The 
creditor might be put in possession of the property 
pledged to him in order that he might satisfy himself 
out of the rents and profits. Such an agreement, 
however, was not permitted to be made the means 
of obtaining usurious interest. 

The above is also very nearly the law followed 
at the present day in countries whose jurisprudence is 
founded on the Civil law. There is, however, one 
important deviation. The creditor is not permitted 
by most continental systems to exercise the power of 
sale except through judicial process. Another depar- 
ture from the civil law may also be noticed. The 
hypothecation of moveables, although sanctioned 
by Roman lawyers, is not permitted in any of the 
modern systems, which are professedly founded on 
the Civil law. 



ENGLISH LAW OF MORTGAGE. 

There is one other system of law which has a 
very close interest for the Indian student; and a 
few words on the English law of mortgages will not, 
I trust, be thrown away. An English mortgage 
resembles in its features, as I have already had 
occasion to remark, the Fiducia of the later Roman 
law. In form it is a conveyance of land by the 
debtor to his creditor, with a proviso that, on repay- 
ment of the debt on a certain day, the conveyance 
shall be void, or, as is more usually the case, that 
the creditor shall reconvey the estate to the debtor. 
If the money is not repaid on the appointed day, 
the mortgagee becomes at law the absolute owner 
of the property, but the Court of Chancery, which 
li:i^ almost exclusive jurisdiction over mortgages, 
regards the transaction only as a security for the 
repayment of the debt, and allows the mortgagor to 
redeem on payment of the principal, interest, and 
costs within a reasonable time, which is now fixed 
by statute at twenty years from the date of the entry 
of the mortgagee, or of an acknowledgment by him 
of the title of the mortgagor. This right to redeem 
is known as the "equity of redemption," and as I 
shall have occasion to explain hereafter, is guarded 
with peculiar jealousy by the Court. The equity 
of redemption is not, as the name perhaps would 
' ' mm- ri-ht. It is an "estate" in the 
lanl, and may be. devised, granted, or otherwise 
by tho mortgagor, subject however to the 



FORECLOSURE AND SALE. 19 

right of the mortgagee to foreclose, when, under the LECTURE 
decree of foreclosure, the estate passes to the mort- - 
gagee free of all incumbrances created since the 



mortgage. 



At any time after the estate has been forfeited at 
law, the mortgagee, however, has the right to call 
upon the mortgagor either to redeem, or, in default, 
to be for ever foreclosed from redeeming the pro- 
perty. This is accomplished by a bill of foreclosure, 
by which the mortgagee prays that an account may 
be taken of what is due to him on his security ; and 
that the mortgagor may be decreed, either to pay 
the amount, by a short day to be appointed by the 
Court, or to be foreclosed his equity of redemption. 
An account is taken, and a day for payment is 
appointed ; the mortgagor being allowed for that 
purpose six months from the date of the Master's 
certificate. If the mortgagor make default, the 
mortgagee obtains an absolute order for foreclosing, 
and the estate passes from the mortgagor to the 
morto-ao-ee. A decree of dismissal of a bill for 

O O 

redemption by reason of non-payment of money at 
the time appointed by the Court also operates as a 
foreclosure. 

The Court, however, sometimes instead of making 
a decree for foreclosure, directs a sale of the mort- 
gaged property, when the purchase money is applied 
in satisfaction of the mortgage, the surplus, if any, 
being paid to the mortgagor. In case of a deficiency, 



.),, ENGLISH LAW OF MORTGAGE. 

the mort-a-ee may recover the difference from the 
mortgagor. A recent statute has considerably 
extended the power of the Court to make a decree 
for sale instead of a foreclosure, but the rule 
of the later Roman law, by which a foreclosure 
> never permitted, has not yet been adopted in 
England. 

O 

A mortgagee has not only the right to foreclose, 
but he mav proceed to enforce at the same moment 
all the remedies to which, according to the nature of 
his security, he may be entitled. He may sue at 
the same time on his bond or covenant, bring his 
ejectment, and file his bill of foreclosure. If, how- 
ever, the mortgagee should enter upon possession 
before foreclosure, he will be bound to account to 
the mortgagor for the rents and profits, while an 
action on the covenant will have the effect of open- 

. the decree for foreclosure, that is of letting in 
the mortgagor to redeem on the usual terms. I 
have already explained that after the mortgage has 
been forfeited by non-payment of principal or 
interest, the mortgagee is regarded as the absolute 
owner of the estate at law. He may, therefore, 
<-nter upon possession, but Equity will compel him 
to account for < very farthing of the rents and pro- 
re;ili/..d by him out of the estate. 

nrse for the mortgagee, when there 
;<pect that the security is insufficient, 
tain an order for sale, or, if that cannot be 



DECREE FOR SALE. 21 

done, to sue on his bond or covenant first, and LECTURE 
then to foreclose for the remainder. L 

A decree for sale would seem to be in ordinary 
cases fair as well to the mortgagor as to the 



o o 



mortgagee. 



"The natural course, and certainly the most 
convenient and beneficial course, " says Mr. Justice 
Story, " for the mortgagor, would seem to be for the 
Court to follow out the civil law rules on this sub- 
ject, that is to say, primarily and ordinarily, to 
direct a sale of the mortgaged property, giving the 
debtor any surplus after discharging the mortgage 
debt ; and secondarily, to apply the remedy of fore- 
closure only to special cases, where the former 
remedy would not apply, or might be inadequate or 
injurious to the interests of the parties. This 
course has, accordingly, been adopted in many of 
the American Courts of Equity ; and it is also the 
prevailing practice in Ireland. It is done without 
any distinction, whether there is a power to sell 
contained in the mortgage or not." "And in most, 
if not all cases, " adds the learned author, " it would 
be equally beneficial to the mortgagee, as it would 
prevent the delays incident to the common decree 
of foreclosure, which is liable to be reopened ; and 
would also prevent any difficulty in obtaining the 
residue of the debt, when the mortgaged property 
is not sufficient to discharge it." (Story's Equity 
Jurisprudence, 1025.) 



POWER OF SALE IN ENGLISH MORTGAGES. 

LKTUEB I pass over for the present many topics connected 
with the Knglish law of mortgage, and shall conclude 
onlv with A few observations touching the power of 
sale, which is generally to be found in English mort- 
gages. Doubts were, at one time, entertained of the 
validity of an exercise of these powers of sale without 
the intervention of a Court of Equity, or the concur- 
rence of the mortgagor. These doubts, however, have 
now been set at rest ; and a recent statute enacts that 
the power may be exercised by every mortgagee 
unless it is negatived by an express declaration in the 
security. (23 & 24 Viet., c. 145.) The mortgagee 
art ing upon the power may sell the property mort- 
ged to him of his own authority, and without the 
intervention of a Court of Equity. If, however, the 
power of sale is not expressly given by the deed of 
ni<>! the mortgagee is bound to give at least six 

months' notice in writing to the person or one of the 
SODfl entitled to the property subject to the charge. 
When the power of sale is conferred expressly by 
-iniment of mortgage, there is generally a 
provision to the effect that the power is not to be 
<1 until the expiration of a previous notice 
t<> i jor. 

The m is regarded as a fiduciary vendor 

ami is bound to adopt every precaution which would 

takrn by a prudent owner to get the best price 

'"' -<tr. T; ise of the power, therefore, 

tor the purpose of oppression, or 



INFLUENCE OF CIVIL LAW. 23 

to accomplish the objects of himself or others, will LECTUEE 
be prevented in Equity either by restraining or set- _L. 
ting aside the sale. The mortgagee cannot proceed 
to exercise his power of sale upon tender to him of 
the principal, interest and costs, and the tender may 
be made even in the auction room. 

Notwithstanding the recent statutory extension 
of the power of sale, the English law does not 
permit a sale if the creditor expressly engage with 
the debtor not to exercise the power. A different 
rule, as we saw, prevailed in the Roman law. 

From the short sketch I have been able to give 
you, you will observe that although the English 
law of mortgage is in some respects " inelegant," 
the principles administered by the Court of Chan- 
cery have, in a great measure, shaped themselves on 
the model of those of the Roman law. The juris- 
prudence of England has been improved on many 
points by the Civil law ; but nowhere is the bene- 
ficial influence of that law so perceptible as in the 
view taken by Equity of the real character of a 
mortovise transaction. It would be far beyond the 

o o 

scope of the present lectures to trace the gradual 
growth of this branch of the equitable jurisdiction 
of the Court of Chancery. But there are few 
things, I venture to affirm, more remarkable in the 
history of law than the successive steps by which 
the law of England touching securities was placed 
on its present footing. 



LECTURE II. 

Hindu and Mahomedan law of mortgages Hindu law Early notions 
of pledge Tradition originally essential to validity of pledge 
(Shih Chunder Ghose vs. Russick Chunder Neogy) Pledgee had in 
early times only a right of detention Foreclosure, and power of 
sale, innovations Classification of securities by Hindu lawyers 
Rule requiring tradition gradually fell into disuse Possession still 
important when any questions touching priority arise Text of 
Brihasputty "Equity of redemption" Sale by judicious process 
Beneficial pledge, and pledge for custody Important distinction 
between the two Right of pledgee to sue when pledge is destroyed 
without his default Analogous rule in Code Civil Rule of Hindu 
law, interest nob to exceed principal Influence of rule on Hindu 
law of pledges. 

I NOW come to the Hindu law of securities, a 
branch of our law which 1 venture to think may be 
placed by the side of the most advanced systems 
of jurisprudence* 

An accomplished lawyer, whose memory will be 

always dear to Sanskrit learning, in speaking of our 

law of bailments, has said: "It is pleasing to 

the .-imilarity, or rather the identity, of 

Insions, which pure unbiased reason in 

all a-cs and nations seldom fails to draw, in such 

i<-ial ini|iiirics as an; not fettered and manacled 

8 in>titution; and although the rules of 

ruing succession to property, flic 



CONFLICTING AUTHORITIES IN HINDU LAW. 25 

punishment of offences, and the ceremonies of reli- LECTURE 
gion are widely different from ours, yet, in the great - 
system of contracts, and the common intercourse 
between man and man, the Pootee of the Indians 
and the Digest of the Romans are by no means 
dissimilar." The law, however, which moved the 
admiration of Sir William Jones has ceased, in one 
sense, to be living law, and it is to be sought at the 
present day not in our books of reports, but in the 
texts of our sages and in the writings of the suc- 
cessive jurisconsults by whom Hindu law was 
gradually moulded into system. It is to that law, 
the truly indigenous system of the country, that 
I propose to call your attention in the present 
lecture. 

I must, however, warn you at the outset that it 
is by no means easy to thread one's way through 
the labyrinth of conflicting texts in which the law is 
sometimes involved. I intend to confine myself 
only to some of the broader features of this branch 
of Hindu jurisprudence. But even with this 
limitation, I cannot but feel a certain degree of 
distrust in the soundness of my conclusions, a 
distrust, I may venture to say, without presump- 
tion, perhaps inseparable from the nature of the 
inquiry upon which we are now engaged. 

I have already said that the authorities upon 
which our conclusions must mainly rest are not 
unfrequently conflicting. The key to this conflict 



2(J DEVELOPMENT OF HINDU LAW. 

Latmnu! is to be sought in the fact that we have to trust to 
texts which, although sometimes placed side by 
side, are of various antiquity, a fact which must 
be carefully borne in mind by the student of Hin- 
du law. Whatever truth there may be in the 
reproach that the Hindus are an unprogressive 
race, even the most careless student of our law 
must admit that the charge must be received with 
considerable reservation. Hindu law is, no doubt, 
archaic, but there are portions of it which furnish 
unmistakcable evidence of maturity. A not very 
friendly critic has said : " There is in truth but 
little doubt that, until education began to cause the 
natives of India to absorb Western ideas for them- 
selves, the influence of the English rather retarded 
than hastened the mental development of the race. 
There are several departments of thought in which 
a slow modification of primitive notions and conse- 
quent alteration of practice may be seen to have 
been proceeding before we entered the country; 
but the signs of such change are exceptionally clear 
in jurisprudence, so far, that is to say, as Hindu 
jurisprudence has been codified. Hindu law is, 
theoretically, contained in Maim, but it is practi- 
cally collected from the writings of the jurists who 
li:ive commented on him, and on one another." 
ine's Village Communities, page 46.) 
In examining Hindu law, we must, I repeat, 
iv (li-tiiiLiui.-li the rudimentary stages of 



COMPARATIVE JURISPRUDENCE. 27 

legal thought from its maturity ; and it is because LECTURE 
this has not always been done, that Hindu law has - 
attracted to itself a cloud of undeserved prejudice. 
It may be said that it is not always possible to 
obtain direct evidence of the relative antiquity of 
the texts of Hindu law; but in this, as in other 
instances, a knowledge of comparative jurispru- 
dence will, I am sure, greatly assist us in " unravel- 
ling the tangled skein " of legal history. Com- 
parative jurisprudence is to the lawyer what com- 
parative grammar is to the philologist; and if 
the results yielded by the latter are more certain, 
it is only because its inductions are founded 
upon a wider basis. The conjecture, however, 
may be hazarded without rashness or presumption, 
that Hindu law will, at no distant date, render the 
same service to jurisprudence that Sanskrit has 
already done to the sister science of philology. 

I will illustrate my position by reference to a 
question connected with the Hindu law of securities 
which has provoked no little conflict of opinion. 

We saw that in Roman law a pledge was origi- 
nally required to be accompanied by possession, 
and that it was only very gradually that hypothe- 
cation found a place in the j urisprudence of Rome. 
In the case of Shib Cliunder Ghose v. Russick 
Chunder Neogy (Fulton's Reports, p. 36), the 
question arose, whether a pledge unaccompanied by 
possession was valid according to Hindu law. 



2g VALIDITY OP HYPOTHECATION. 

LECTURE Conflicting texts were cited in the argument. The 
plaintiff relied upon the text of Brihasputty, " Of 
him who does not enjoy a pledge, nor possess it, nor 
claim it on evidence, the written contract for a pledge 
is nugatory, like a bond when the debtor and wit- 
nesses are dead." The defendant relied upon the 
text of Naroda : " By the acceptance or actual 
possession of a pledge the validity of the contract 
is maintained." " Pledges are declared to be of two 
sorts, immoveable and moveable, and both are valid 
when there is actual enjoyment, and not otherwise" 
The Judges were divided in opinion; but the major- 
ity of the Court held that whatever might have 
been the case in early times, the later Hindu law 
clearly sanctioned the validity of a pledge although 
unaccompanied by possession; and they relied as 
well upon some of the written texts of Hindu law 
as upon the general usage of the country. Mr. 
Justice Grant, however, was of a different opinion, 
and I shall presently call your attention to the 
reasons given by the learned Judge as a striking 
illustration of the delusions which had at one time 
crystallized round the so-called "law of nature ;" 
but before I do so I must enter upon a discussion, 
which may perhaps at first sight seem to be some- 
what outside the range of the present lectures; but 
which a closer examination will, I trust, show to be 
relevant. I allude to the important part played 
by tradition in early law. 



REAL AND PERSONAL RIGHTS. 29 

It seems that in the rudimentary stages of legal LECTUBE 
thought there was no distinction between a contract - 
and a conveyance. Sir Henry Maine has shown 
that, in the Roman law, contracts, as well as transfers, 
were originally known by the same name, and were 
accompanied by the same formalities. In course of 
time, however, the notion of a contract disengages 
itself from the notion of a conveyance, and then we 
have the well-known distinction between " real" and 
" personal" rights. (Ancient Law, Chap. IX.) A 
" real right," or jus in rem, is, as you are aware, a 
right availing against the world at large; while a 
"personal right" (jus ad rem} is a right availing 
only against some determinate person or persons. 
Take the case of an executory contract of sale. If, 
for instance, A agree to sell a parcel of land to B, 
B acquires a personal right against A to compel him 
to fulfil his contract ; or if that is impossible, B can 
compel A to compensate him for the breach. B, how- 
ever, has no right whatever against third persons who 
may withhold the land from him. The right is a per- 
sonal right, arising out of an agreement. But if A, 
in pursuance of the contract, convey the land to B, 
B is said to acquire a real right, which he can assert 
against third persons. Now in archaic law there 
could be no valid conveyance unless accompanied 
by tradition. Possession was, therefore, an essential 
element in the acquisition of a real right. Various 
explanations have been suggested of the origin of 



30 IMPORTANCE OF TRADITION IN ARCHAIC LAW. 

LECTURE this rule. But whatever might be the origin of the 
- rule, there can he very little doubt that it was 
retained in almost every system of law, because it 
served a useful purpose. As a conveyance trans- 
ferred a real right it was very desirable that it should 
take place openly, and change of possession was, 
perhaps, best calculated to accomplish that object. 
The inconvenience of the proceeding, however, must 
have suggested the gradual relaxation of the rule; 
and in the maturity of jurisprudence tradition loses 
its original importance, and is almost everywhere, 
in time, replaced by a system of registration of 
titles. It has been thrown out by a learned writer 
that the first relaxation probably took place in the 
case of mortgages, and an examination of the 
Roman law certainly shows that, in the Western 
world at any rate, this was the case. The Roman 
j>r;ctors, in recognising the validity of a hypothe- 
cation, broke in upon what I may call the rule of 
the common law, a rule which was retained in 
Roman jurisprudence to the last, by which no real 
right could pass without tradition. It is not possible 
to say whether precisely the same course of develop- 
ment was followed by the Hindu law. There can, 
however, l)e little doubt that in mature Hindu law the 
rule requiring tradition had fallen into disuse, and 
that a real ri-ht, whether by mortgage or sale, could 
be conform! by a mere expression of the intention of 
the parties. A close examination of the subject 



MITACSHARA ON " CORPOREAL ACCEPTANCE." 31 

would be beyond the scope of the present lectures; LECTUBE 
and I shall content myself only with citing a passage 
from the Mitacshara which shows the state of the 
Hindu law on the point. " The acceptance of gold, 
cloths, &c., being completed by the ceremony of 
bestowing water, and falling, therefore, under either 
of the means, may be designated as a three-fold 
acceptance ; but in the case of land, as there can 
be no corporeal acceptance without enjoyment of 
the produce, it must be accompanied by some little 
possession, otherwise the gift, sale, or other transfer 
is not complete. A title, therefore, without cor- 
poreal acceptance, consisting of the enjoyment of 
the produce, is weaker than a title accompanied by 
it, or with such corporeal acceptance. But such is 
the case only when of these two the priority is 
undistinguishable ; but when it is ascertained which 
is first in point of date, and which posteriory then the 
simple prior title affords the stronger evidence" 
(Macnaghten's Hindu Law, Vol I, pp. 218-219.) 

I have dwelt at some length upon the subject, 
because Hindu law cannot be properly understood 
without some general knowledge of comparative 
jurisprudence, which alone can furnish us witli a 
key to the apparent conflict in our written law. In 
the digest of Juggannath, side by side with texts 
which belong to the infancy of law, we find others 
which belong to a much more advanced stage of 
legal thought. Our knowledge of the gradual 



32 SHIBCHUNDER CHOSE V. RUSSICKCHUNDER NEOGT. 

I.I:.-TUBE progress of law in the Western world will, however, 
'- enable us to determine with tolerable certainty the 
historical order of the different authorities upon 
which our conclusions must rest. The inductions 
of comparative jurisprudence are as yet, no doubt, 
founded upon a limited basis, but I may safely ven- 
ture to affirm that the written texts of Hindu law, 
which require the delivery of possession by the 
mortgagor to the mortgagee, are older than those 
which do not insist upon tradition. It seems to 
me, with very great deference, that this simple fact 
is not sufficiently attended to by Mr. Justice Grant 
in his elaborate judgment in the case of Shib 
Chunder Ghose v. Russick CJiunder Neogy, in 
which this question was fully discussed. In that 
case Mr. Justice Grant is reported to have said : 
"In questions, therefore, which concern the laws 
of countries into which the feudal law has not been 
introduced, it is of importance to begin by ascer- 
taining what the Roman law was upon those ques- 
tions, because it is the best digest of the rules 
which affect the rights and obligations of mankind 
according to the natural principles common to all 
nations. If we find the law laid down in any 
ttise upon the subject which is in question, con- 
formablc to the principles of the Jus gentium stated 
in the Konian law, we are entitled to believe that it 
is correctly laid down. If we find it declared to 
be otherwise, \ve arc driven to search for some 



ROMAN LAW OP PLEDGE. 33 

reason in the circumstances of the people which LECTUBM 
shall account for their institutions in that matter - 
differing from those of the rest of mankind. If we 
find authorities in their law differing and equally 
balanced, we must believe those to be correct which 
agree with the general principles of natural law 
still more if we find the majority agreeing with 
those principles and expressing themselves clearly, 
and the minority apparently differing from them 
and expressing themselves more obscurely and less 
decidedly." 

Mr. Justice Grant then proceeds to examine what 
he calls the general principles of natural law as 
they are to be found in the Roman law. After 
stating that there could be no valid pledge without 
possession, the learned Judge, referring to the 
hypothecation of the later Roman law, says : " The 
Jus hypothecce was limited to certain securities, 
chiefly, if not solely, over moveable property, and 
to certain cases, and under certain regulations, 
afforded by the equity of the praetor. It was 
pactum prcetorium not arising out of general princi- 
ples of law, or forming part of their common law, 
or jus non scriptum, but a municipal institution intro- 
duced by that magistrate. Puffendorff confines 
this security of pledge expressly to the giving the 
creditor some certain thing in pawn till the debt be 
paid, and, considers the hypotheck of the Romans to 
have been confined to mnnoveable property. " The 



34 LAW OF NATURE. 

LBCTUBK distinction," says Sir William Jones, " between 
- j)ledging where possession is transferred to the cre- 
ditor, and hypothecation where it remains with the 
debtor, was originally derived from the Attick law." 
In what circumstance the Athenians admitted the 
hypothecation, we do not know. But that with 
them, as with the Romans, delivery of possession 
was necessary to constitute pledge by what we may 
call their common law, there seems no doubt. 
This, therefore, was the law of the whole ancient 
world of civilized Europe, extending as well to 
immoveable as to moveable property secundum jus 
gentium. And it is also the law of the whole of 
modern Europe in regard to moveables." (Fulton's 
Reports, page 36.) The learned Judge, therefore, 
comes to the conclusion that tradition is necessary 
to the validity of a pledge in Hindu law, a conclu- 
sion which we are told is in conformity with " the 
general principles of natural law." If it were not 
for the peculiar views about the law of nature so 
widely prevalent at one time, Mr. Justice Grant 
could hardly have failed to perceive that the Hindu 
law might have been developed in course of time 
in the same manner as the Roman law was developed 
by the introduction of the hypothecation. We have 
lit-re an instance of juridical improvements in the 
A AVst repeating themselves in India. 

W- have seen how in one respect the Hindu law 
slowly matured itself. 1 will now proceed to discuss 



TEXT OF MANU. 35 

another question which has also given rise to consi- LECTUBK 
derable conflict of opinion, a conflict which has - 
added not a little to the evil reputation for uncer- 
tainty which the Hindu law has acquired. 

We saw in the last lecture that in the Western 
world a security was originally regarded only as a 
means of compelling the debtor to fulfil his engage- 
ment, and that it was only very slowly that Roman 
jurisprudence emancipated itself from this concep- 
tion. The questions naturally suggest themselves, 
was there any analogous movement in Hindu law? 
Are there any traces in Hindu law of the primitive 
notions of a security ? Now an examination of 
our law shows, as I have already said, that a real 
security was comparatively a late development of 
Hindu jurisprudence. The earliest record of Hin- 
du law which we possess discloses that stage of 
legal thought in which a security is limited to a 
bare right of detention. Manu says, " Whatever the 
length of time, a pledge may neither be sold nor 
assigned by the pledgee." Here we find the very 
same restrictions upon the rights of the creditor as 
we found in early Roman law. In course of time, 
however, these restrictions were withdrawn, and the 
security of the pledgee in Hindu law became a 
true real security. The change was accomplished 
by the successive jurisconsults, by whom, in the 
absence of direct legislation, the improvement 
of our law was carried on. The authority of Maun 



36 CLASSIFICATION OF SECURITIES IN LATER HINDU LAW. 

LZCTCBE is never openly disowned, and yet we find in the 

1 mature Hindu jurisprudence the rule laid down 

in the code reduced to very narrow limits; the 
dictum of Manu being confined to the single case 
of a pledge in which the creditor is permitted to 
receive the profits in lieu of interest, and the right 
to redeem the pledge is by the express agreement of 
the parties unlimited as to time. In order to explain 
mvself I ought to state that, in the later Hindu 
law, a pledge might either be limited as to time or 
for an indefinite time. It might also either be a 
pledge for use, or for mere custody. In the pledge 
for a limited time, the property, by the express terms 
of the agreement, passed to the creditor on default. 
Jn the pledge for use no interest was permitted to be 
taken by the creditor in addition to the usufruct. It 
is not necessary to discuss any of the rules peculiar to 
each of these classes. All that I wish to observe is, 
that the division of securities into pledges for a limited 
period, and pledges for an indefinite time, marks an 
advanced stage of juridical thought. No trace of 
any such classification is to be found in Maim, 
although the distinction between beneficial pledges 
and pledges for custody is pointed out in the code. 
In the maturity of Hindu jurisprudence the creditor 
possessed a real security in every case in which the 
pledge was for a limited period, and in some cases 
also where tin- pli-dgo was for an indefinite time. 
In the case of a pledge for an indefinite time, if the 



EIGHT OP DETENTION REPLACED BY REAL SECURITY. 37 

pledge was one for custody only, the property LECTUKE 
passed to the creditor when the debt had doubled 
itself, the rule of Hindu law prohibiting the 
accumulation of interest exceeding the principal. 
The law, however, went a step further when it 
allowed the creditor to sell the pledge and repay 
himself out of the proceeds even when a forfeiture 
was guarded against by the express stipulations of 
the parties. The pledgee was entitled to exercise 
this right if the pledge happened to be of the 
class known as a pledge for custody and the debtor 
failed to redeem after the interest had become 
equal to the principal. It would seem that in the 
last case the creditor only possessed the right to 
sell the pledge. In every other case a sale was 
entirely in the option of the mortgagor. 

The foregoing sketch shows how a pledge in 
Hindu law limited by Manu to a bare right of deten- 
tion ripened in course of time into a true real 
security. This was accomplished by a series of 
limitations imposed upon the very broad proposition 
which we find in the code. It is not always pos- 
sible to trace the successive stages of the progress 
of the Hindu law; but in the present case, I think, 
the task can be accomplished with tolerable 
certainty. The first improvement appears to have 
been the introduction of a clause by which the 
debtor agreed to the property in the pledge passing 
to the creditor upon default. The division of 



38 IMPROVEMENTS IN HINDU LAW OP SECURITY. 

LBCTUBE pledges which we find in the later Hindu law into 
pledges for a limited and pledges for an unlimited 
period, is nowhere alluded to by Manu, and there 
can I think be but little doubt that the classi- 
fication denotes a very great advance in legal 
thought. Partly by calling in this distinction, 
and partly by help of the distinction between 
pledges for use and those for mere security, the 
successive commentators cut down the rights of 
the pledger to what I will venture to call the 
most reasonable limits. The commentators, who, as 
I have already said, always professed the very 
greatest veneration for the text of the code, 
explained the dictum of Manu as having reference 
only to cases in which there was no express agree- 
ment that the pledge should be forfeited on default. 
This was the first of the series of limitations by 
which the application of the text of Manu was 
gradually narrowed. Chandeswara, Bachespati, 
Bhavudeva, all concur in the opinion that the text 
applies only to a pledge in which there is no special 
agreement by which the right of the debtor is 
liable to forfeiture. It was not long before the law 
was further developed. The process by which this 
iras accomplished was by presuming the existence 
of a clause of forfeiture when the debt doubled 
If in the case of a pledge for custody. The text 
of Maim was now narrowed down by an ingenious 
construction only to the single case of a beneficial 



DISCUSSION IN THE MITACSHARA. 39 

pledge in which no time was limited for redemption. LEG-ITU; 
I have, however, passed over an intermediate stage 
in the development of the law in which the pledgee 
for custody was entitled to use the pledge after the 
accumulation of interest to the extent permitted by 
the law. The latest improvement, as I have already 
said, consisted in the right which the law gave to 
the creditor to sell the pledge even when there was 
an express stipulation that the property should not 
be forfeited although the debt was doubled. I shall 
now call your attention to a discussion in the Mitac- 
sliara, which, while it confirms the truth of the 
proposition that a real security was a late product 
of Hindu jurisprudence, offers an apt illustration 
of the method of interpretation followed by Hindu 
commentators. Referring to the text of Brihasputty, 
" Gold having doubled, and the stipulated period 
having expired, the creditor becomes owner of the 
pledge after the lapse of fourteen days. If the 
debtor repays the amount within the time, he shall 
get back the pledge," the author of the Mitacshara 
says " A question arises that the pledge is forfeited 
is not consistent, because there is neither a gift 
nor sale, &c., by which the right of the debtor can 
cease ; neither is there an acceptance, nor purchase, 
&c., by which the right of the creditor can accrue ; 
and that it is also contrary to the text of Manu." 
"However long the time may be" means for 
whatever length of time the pledge has been in the 



40 COMMENTARIES ON THE TEXT OP MANU. 

LECTI-RE custody of the pledgee. "Assigned," pledged to 
a third person by the pledgee. Hence, by the 
prohibition of assignment and sale, it is evident 
that the right of the pledgee does not accrue. 
Answered. It is a well known popular notion that 
a transfer by pledge is a qualified cause of the loss 
of right; and acceptance of the pledge, a qualified 
cause of the creation of right. Consequently, after 
the debt has doubled, and the stipulated time has 
arrived, the right to satisfy the debt ceases, and by 
virtue of this text the debtor's right is lost for ever, 
and that of the creditor accrues. Nor is it contrary 
to the text of Manu " after no length of time neither 
:ui assignment nor a sale of the pledge can be 
made." For this is said by the sage (Manu) on the 
subject of a pledge for use, as he commences by 

ving, " if he take a beneficial pledge, he must 
have no other interest on the loan." 

You will remember that the passage in Manu was 
expounded by the earlier commentators as apply- 
ing only to pledges whether for use or custody, 
where there was no express agreement that the 
property should be forfeited on default. Hindu 
law, however, had advanced since that time; and 
onlin-ly we find the author of the Mitacshara 
placing a still more restricted interpretation on the 

' of Manu. This was the way in which Hindu 

law was gradually improved under conditions which 

tiuly not very favourable to progress. 



HINDU LAW OF PLEDGE IN ITS MATURITY. 41 

Referring to the development of law by successive LECTUBB 
comments by jurisconsult upon jurisconsult, Sir 
Henry Maine says : " Even so obstinate a subject- 
matter as Hindu law, was visibly changed by it for 
the better. No doubt the dominant object of each 
successive Hindu commentator is so to construe 
each rule of Civil law as to make it appear that 
there is some sacerdotal reason for it;, but subject 
to this controlling aim, each of them leaves in the 
law, after he lias explained it, a stronger dose of 
common sense and a larger element of equity and 
reasonableness than he found in it as it came from 
the hands of his predecessors." (Village Communi- 
ties, p. 45.) 

We have now arrived at the state in which the 
Hindu law stood in its maturity. We find that if 
the debtor committed default,, the property in the 
pledge passed to the creditor, who might, however, 
in the exercise of his discretion, sell the pledge ; 
when, if there was a surplus, the debtor became 
entitled to it. In the case, however, of a pledge, 
for custody, where there was an express stipulation 
against forfeiture, the creditor could not foreclose, 
but could only exercise the right of sale. The only 
case in which there could be neither a sale nor a 
foreclosure, was when the pledge was of the descrip- 
tion known as a " beneficial pledge," and the right 
of redemption was by the express agreement of the 
parties not limited to any particular period. 



42 SALE BY JUDICIAL PROCESS. 

LECTURE The creditor was in no danger of losing his interest, 
- and the law, therefore, left him to the terms of his 
contract with the debtor. 

It would seem that, under the Hindu law, the 
mortgagee could not sell the pledge except through 
judicial process. Brihasputty says : " When the 
pawner is missing let the creditor produce his 
pledge before the king ; it may then be sold with 
his permission: this is a settled rule. Receiving the 
principal with interest, he must deposit the surplus 
with the king." This text, therefore, shows that the 
creditor was not entitled to sell the pledge of his 
own authority. 

We have already seen that, in later Hindu law, 
it was not necessary that a pledge should be accom- 
panied by possession. 

It must not, however, be supposed that a mort- 
gagee who had omitted to take possession was 
L'xactly in the situation of one who had taken the 
precaution of publishing the mortgage, if I may 
use the expression, by taking possession of the 
property pledged to him. Whenever any question 
of priority arose, the mortgagee in possession, though 
hi>- mortgage might be later in date, was always 
pn-ti-nvd to the mortgagee who had neglected to 
iMiti-r upon possession. " If two men, to whom the 
x m it.- property has been pledged, enter into a con- 
to him who lias possessed the land it shall 
if no force were used." (Smriti, cited 



DRISTI BANDHAK. 43 

iu the Ratnacara ; Colebrooke's Digest, Vol. T, LECTURE 
p. 217.) 

It would seem from the use of the expression 
" without force," that the possession must be 
acquired in good faith, and the text seems to limit 
the preferable right of the puisne incumbrancer in 
possession only when the money has been advanced 
without notice of the prior mortgage. 

While upon this subject a few words on a kind 
of mortgage very common in the Southern and 
Western Presidencies may not be thrown away. 
This is the Dristi Bandhak, or a mortgage of visible 
things. In this kind of mortgage, the mortgagor 
remains in possession till default is made by him, 
when the mortgagee becomes entitled to enter upon 
possession as absolute owner of the property. It 
is with reference to this class of mortgages that 
Sir William Strange says : " It may be doubted 
whether this mode of pledging be not originally 
Hindu instead of Attic as has been supposed." 
The existence of this class of mortgages shows very 
clearly that Hindu law had long outgrown that 
stage of juridical thought in which tradition is 
regarded as essential to the constitution of a mort- 

O 

gage. 

I have already shown how, in certain cases , the 
priority of mortgages was determined by possession. 
I shall now state some other rules governing prio- 
rity in Hindu law. A mortgage in writing was 



44 RULES GOVERNING PRIORITY. 

TUBE preferred to a parol mortgage. " If a pledge, a 
- sale, or a gift of the same thing be alleged to be 
made before witnesses to one man, and by a 
written instrument to another, the writing shall 
prevail over the oral testimony, because one contract 
only is maintained. (Smriti, Colebrooke's Digest, 
Vol. I, pages 220-21.) Another rule is to be found 
by which a writing in which the property mortgaged 
is clearly defined, is preferred to one in which there 
is no such specification of the property intended to be 
pledged. (1.) "But, if a man first mortgage land 
without noticing all circumstances, and afterwards 

O ' 

mortgage it with express description by name and 
the like, that writing which contains an express 
distinction shall prevail." " If a field or a house be 
described in a written instrument by its limits, and 
it' villages and the like be so described, the contract 
is valid." When a distinction is expressed in a 
writing to one man, and no distinction to another, 
the express distinction, says Catyayana, shall pre- 
ponderate. (Smriti, Colebrooke's Digest, Vol. I, 
I-. -2-2'2.) A general hypothecation does not seem to 
have- bfcn recognised by the Hindu law. A text cited 
i" the Di- "If a man pledge his property 

unezhibited and undescribed as to its nature, and 
(Msoijuriitly imperceptible like the subtile element, 
that shall not bo considered as a definite pledge." 
lebrook Vol. I, p. 225.) There are one 

\\o more points in connection with Hindu law 



DESTRUCTION OF PLEDGE. 45 

which deserve notice. "Mortgaged land," says 1,1.,, u 
Yagnyawalcya, " being carried away by a rapid 
stream, or being seized by the king, another pledge 
of land must be delivered, or the sum lent must be 
restored to the lender." (Colebrooke's Digest, Vol. I, 
p. 168.) Similarly, Catyayana says, '" Whatever 
pledge has been lost by the act of God or the 
king, the debt for which it was given shall be 
paid by the debtor to the creditor with interest." 
(Colebrooke's Digest, Vol. I, pp. 169 & 170.) 
Brihasputty also says, " If a pledge be destroyed 
by the act of God or of the king, the creditor 
shall either obtain another pledge, or receive 
the sum lent together with interest." Narada says, 
" When a pledge, though carefully preserved, is 
spoiled in course of time, another pledge must be 
delivered, or the amount of principal and interest 
must be paid to the creditor. (Colebrooke's Digest, 
Vol. I, pp. 165 & 166.) An analogous rule is to 
be found in the French Code, Article 2131, which 
says: "In like manner, in case the present 
immoveable or immoveables, subjected to mortgage, 
have perished, or sustained deterioration, in such 
manner that they have become insufficient for the 
security of the creditor, the latter shall be permitted 
either to sue immediately for repayment or to 
obtain an additional mortgage." 

The Hindu law did not permit the redemption 
of a usufructuary mortgage for a limited period 



40 RIGHTS OF MORTGAGOR. 

LECTURE before the expiration of the term. The rights of 
1 the mortgagor are, no doubt, guarded with scrupu- 
lous care, but the sentimental tenderness for the 
debtor, which sometimes overlooks the just rights 
of the creditor, finds no place in our ancient law. 
" When a house or field, mortgaged for use," 
says Brihasputty, "has not been held to the close 
of its term, neither can the debtor obtain his pro- 
perty, nor the creditor obtain the debt." The law- 
giver, however, adds, "After the period is com- 
pleted, the right of both to their respective property 
is ordained ; but, even while it is unexpired, they 
may restore their property to each other by mutual 
consent." (Colebrooke's Digest, Vol. I, p. 199.) 

I shall conclude with a few observations on the 
general rights of the mortgagor. The mortgagor, 
notwithstanding the mortgage, could deal with 
the property as owner subject to the limitation that 
he was not permitted to do anything which might 
impair the security of the mortgagee. He could 
make a gift or sale of the property, and the trans- 
feree would, in either case, have the right to redeem 
the mortgage. Raghunandana, in his Dayatutwa, 
MI vs, " Thus also if the pledge be not redeemed by 
iva.son df death or the like of the seller or donor, 
it may be redeemed by the buyer or donee, because 
a ri-ht equal to that of the former owner has been 
rated by the sale or gift. In such a case if a 
arise as to the source of the right, then the 



FRAUDULENT SECOND MORTGAGE. 47 

buyer or the donee (who is admitted as such) is LECTUEE 
required to prove his possession, and not the com- 
mencement of his title." (Dayatatwa, Translated 
by Golap Chunder Sirkar Sastri, sec. 16, p. 32.) 
The passage is also interesting as showing that 
hypothecation was a common mode of mortgaging 
property, at least in Bengal, in the sixteenth century. 

A text of Vishnu is sometimes cited to show that 
a second mortgage was not permitted by the Hindu 
law. " He who has mortgaged," says Vishnu, 
" even a bull's hide of land to one creditor, and 
without having redeemed it, mortgages it to another, 
shall be corporally punished by whipping or 
imprisonment ; if the quantity be less, he shall pay 
a fine of sixteen suvernas" (Colebrooke's Digest, 
Vol. I, p. 216.) The text would seem to point to a 
fraudulent second mortgage executed by the debtor 
without disclosing the prior mortgage, a fraud 
which the Hindu law, in common with other systems, 
is careful to guard against. The reasoning of the 
Bengal lawyer would seem to show that no exception 
could be taken to a second mortgage honestly created 
by the debtor ; while the extremely severe penalty 
attached to a violation of the duty which the text 
imposes on the mortgagor, also points to the same 
conclusion. 

I have now brought down the history of Hindu 
law to its maturity. I regret that the limits I 
am obliged to propose to myself will not permit a 



48 HINDU LAW OF SECURITY. 

LECTURE fuller account. The Hindu law of security however 
ii. 
deserves very careful study, and I trust I shall 

not be accused of an idle pride in my own 
national system if I venture to affirm that although 
not quite so perfect as the Roman law, it is still on 
the whole a model of good sense and logical 
consistency. 



LECTURE I }. (Continued.; 



Mahomedan Law of Mortgage Difference between Mahomedan Law and 
Hindu and English Law Rakn, literally detention Pledge inva- 
lid unless followed by transfer of possession Things capable of 
being pledged Those of which possession could be delivered 
Things which could be sold, but of which possession could not be 
given, could not be pledged Opinion of Shafei Pledge for con- 
tingent debt Liability of pledgee for loss or destruction of pledge 
Interest unlawful Influence of rule in retarding development 
of law of pledge Qualified power of sale Must be given by 
contract itself Bye-bil-waffa, a comparatively modern innovation 
Conflicting opinions of Mahomedan lawyers as to its legality Opi- 
nion of Mahomedan law officer in Bussunt Ally's case. Recognition 
of validity of Bye-bil-waffas in India Gradual recognition of hypo- 
thecation Probable influence of Hindu Law No distinction 
between pledges of land and pledges of moveables Moveables, 
originally the subject of pledge Gradual extension of pledge of 
land Hypothecation. 

I WILL now proceed to give a short outline of the 
Mahomedan law of securities. The Mahomedan 
law, however, to which I propose to call your atten- 
tion in this lecture, is not the law which is adminis- 
tered at the present day by our Courts of Justice, 
but that which is to be found in the authoritative 
treatises of Mahomedan doctors. Mahomedan law 
has, no doubt, made great progress since ; but in 
the process it has lost all its distinctive features, 
and there could, I apprehend, be no better proof of 



50 ANALOGY BETWEEN MAHOMEDAN AND ROMAN LAW. 

LECTUBE this than the fact that, according to the law as 

_ administered in Bengal and the North- Western 

Provinces, at any rate, the respective rights of 
mortgagor and mortgagee are the same, whether 

o o o o * 

the parties are Hindus or Mahomedans. The 
process which Mahomedan law underwent in India 
may be described as one of gradual assimilation 
to the Hindu law. 

There is one feature of Mahomedan law which 
distinguishes it as well from the Hindu as from 
the English law. We saw that in both the latter 
systems, the ownership of the property mortgaged 
is liable to pass to the creditor on the failure of the 
debtor to repay the loan by the appointed time. 
The transfer is the result of the agreement of the 

O 

parties, by which the debtor renounces his right to 
the pledge upon default. In the Roman law, how- 
ever, we found that another kind of security was 
invented at a very early period, by which the posses- 
sion only was transferred to the creditor. This kind 
of security, as I told you, had a very great fortune in 
Roman law. It displaced the older form of secu- 
rity, and the respective rights and duties of the 
pledger and pledgee were moulded on principles 
altogether different from those which have obtained 
in systems in which a conditional transfer of owner- 
si tip is the recognised mode of giving security. 
In the later Roman law, the ownership never passed 
t" the creditor upon default, lie was only autho- 



PLEDGE AS DEFINED IN THE HEDATA. 51 

rised to sell the pledge and satisfy his debt out of LECTUBE 
the proceeds. Now the pledge of the strict Maho- - 
medan law resembles very closely the pignus of 
the Civil law. The creditor is not permitted to 
become the owner of the pledge. His right is 
confined with certain limitations to be presently 
noticed to the sale of the pledge, when, if there is 
a surplus, the debtor becomes entitled to it. It is 
true that the ingenuity of Mahomedan lawyers 
soon invented another kind of security analogous 
to the fiducia of the Roman and the mortgage of 
the English law. But there cannot be the shadow 
of a doubt that the early Mahomedan law did not 
recognise any other kind of security than the Rahn, 
to which I now propose to address myself. 

A pledge in Mahomedan law, as signified by its 
name (Rahn), is defined in the Hedaya as "the 
detention of a thing on account of a claim which 
may be answered by means of that thing, as in the 
case of debts." (Hedaya, Vol. IV, p. 189.) There 
is a good deal of discussion in the Mahomedan 
books as to the necessity of possession to the 
validity of a pledge, but the better opinion seems to 
be that a pledge is not valid unless accompanied 
by possession. It is said in the Hedaya that 
" until the seizin actually take place, the pawner is 
at full liberty either to adhere to, or recede from, the 
agreement, as the validity of it rests entirely upon 
the seizin, without which the end and intention of 



52 ARCHAIC NOTIONS OF PLEDGE. 

LBCTUBE a pledge cannot be answered." (Hedaya, Vol. IV, 
p. 190.) In these words you cannot fail to perceive 
the very same primitive notions which are traceable 
in early Hindu and Roman jurisprudence. It is 
also clear that the Mahomedan law had not ceased 
to be under the dominion of archaic notions when 
the Hedaya was compiled. The conflicting dicta, 
however, which are collected by the author, show 
that the process of emancipation had already com- 
menced, and, it may be presumed, was accelerated 
by the Hindu law, with which it came into contact 
in India. 

Possession being thus essential to the validity of 
a pledge, it followed as a corollary that things 
of which there could be no delivery of possession 
according to Mahomedan notions, could not be given 
in pledge. Thus, an undivided share in any pro- 
perty, whether moveable or immoveable, could not be 
lawfully pledged. One eminent Mahomedan lawyer, 
indeed, who seems to have entertained sounder 
notions on the subject, maintains a contrary opinion; 
but the weight of authority is opposed to his view. 
The discussion on this point in the Hedaya shows 
a conflict between archaic notions and modern 
ideas, which is extremely interesting. 

" It is unlawful," says the author of the Hedaya, 
"to pawn an indefinite part of anything. Shafei 
maintains that it is lawful. On behalf of our doctors 
two reasons are urged. First, this disagreement 



RIGHTS OF PLEDGOR AND PLEDGEE. 53 

arises from the difference of opinion regarding the LECTURE 
object of pledges; for, according to us, pledges are '- 
taken to be detained, with a view to obtain payment 
of a debt, which cannot be effected in case the 
pledge be an undefined part of property; because 
a seizin of things of that nature cannot be made, a 
real seizin being only practicable with respect to 
things which are defined and distinguished where- 
as, according to Shafei, the object of pledges is that 
the pawnee may sell them to effect a discharge of 
his debt ; and with this object pledges of the nature 
above mentioned are not in any shape inconsistent. 
Secondly, it is an essential part of the contract 
of pawn, that the pledge be constantly detained in 
the hands of the pawnee until the redemption of 
it by the pawner a condition which cannot be ful- 
filled with respect to pledges of the above nature ; 
for, in such cases, it would be necessary that the 
pawner and the pawnee have possession of the 
article alternately, whence it would be the same as 
if the pawner were to say to the pawnee, " I pawn it 
to you every other day ;" as, therefore, a constant 
detention is in such case impossible, it follows that 
the pledge of an undefined part of anything, 
whether capable of division or incapable, is illegal." 
(Hedaya, Vol. IY, p. 192.) 

I shall now proceed to consider the rights of the 
pledgee in Mahomedan law. I propose to place 
before you only some of the broader principles, as 



54 RIGHTS OF PLEDGOR AND PLEDGEE. 

LECTUBE the details do not possess much interest. The 

1 pledgee had the right to sell the pledge on default, 

but only when the right was given by the contract 
itself. He was then regarded as the agent of the 
debtor, but the authority upon principles recognised 
in every system of law was not revocable. It was 
not necessary that the authority should be given to 
the creditor himself. It mi^ht be given to a third 

<*j o 

person, who might be compelled by the Court to 
exercise the power. A sale, however, through 
judicial intervention seems to have been unknown, 
and the Kazee could only compel a person 
who had been invested with the power of sale to 
exercise it for the benefit of the creditor. If the 
power of sale was not given by the original con- 
tract, the pledgee had only a bare lien, without the 
right of getting material satisfaction out of the 
pledge. 

In the Mahomedan law, the debtor was not 
authorised to deal in any way with the property 
pledged by him ; and a sale without the consent of 
the creditor was invalid. If, notwithstanding, 
the debtor sold the property to two persons in 
succession, the person who was recognised as 
the purchaser by the pledgee, acquired a preferable 
right to the property, although the sale to him might 
be posterior in point of time. 

The rule of the Mahomedan law regarding the 
liability of the pledgee for the destruction of the 



MAHOMEDAN LAW OF PLEDGE. 55 

pledge, even when the destruction is accidental, LECTURE 
is somewhat peculiar. It is thus stated by Mac- "' 
naghten: "Where such property, being equivalent 
to the debt, may have been destroyed otherwise 
than by the act of the pawnee or mortgagee, the 
debt is extinguished; where it exceeds the debt, 
the pawnee or mortgagee is not responsible for the 
excess; but where it falls short of the debt, the 
deficiency must be made up by the pawnor or 
mortgagor : but if the property were wilfully des- 
troyed by the act of the pawnee or mortgagee, he 
will be responsible for any excess of its value 
beyond the amount of the debt." (Macnaghten's 
Mahomedan Law, page 82, para. 19.) 

There are one or two more points which deserve 
notice. T)ie pledgee was not permitted to enjoy 
the usufruct of the property pledged to him, but he 
was not chargeable with the expense of providing 
for the support of the pledge, although he was 
bound to provide for its custody. " It is to be 
observed," says the author of the Hedaya, " that the 
wants of a pledge are of two kinds: (1) such as are 
requisite towards the support of the pledge and the 
continuance of its existence; (2) such as may be 
necessary towards its preservation of safety, whether 
wholly or partly. Now, as the absolute property of 
the pledge appertains to the pawner, the expenses 
of the first class must, therefore, be defrayed by him ; 
and as he has, moreover, a property in the usufruct 



56 PLEDGE FOR CONTINGENT DEBT. 

LECTUBE of the pledge, its support and the continuance of its 
'- existence for this reason also rest upon him, being 
an expense attendant upon his property, in the 
same manner as holds in the case of a trust. Of 
this class are the maintenance of a pledge in meat 
and drink, including wages to shepherds, and so 
forth; and the clothing of a slave, the wages of a 
nurse for the child of a pledge, the watering of a 
garden, the grafting of fig trees, the collecting of 
fruits, &c. The expenses of the second class, on 
the contrary, are incumbent on the pawnee ; because 
it is his part to detain the pledge ; and, as the preserv- 
ation of it therefore rests upon him, he is conse- 
quently to defray the expense of such preservation. 
Of the second class is the hire of the keeper of the 
pledge; and so likewise the rent of the house, 
wherein the pledge is deposited, whether the debt 
exceed or fall short of the value of the pledge." 
(Hedaya, Vol. IV.) 

A pledge cannot be given as a security against 
contingencies. Thus, a pledge deposited with a 
person as a security for anything which may be due 
in future, is invalid; "although," adds the Hedaya, 
" it is otherwise in the case of a promised debt, as 
where a person gives a pledge to another on the 
strength of his promising to lend him one thousand 
dirms, and the other takes the pledge and promises 
to lend the money, and the pledge perishes in his 
banda; fur in this case he is responsible in proportion 



SLOW DEVELOPMENT OF MAHOMED AN LAW. 57 

to the sum promised, in the same manner as if it LECTURE 
had been actually paid, the promise of debt being - 
considered as an actual existence of it, for this reason 
that it was made at the earnest desire of the 
borrower." (Hedaya, Vol. IX, pages 208, 209.) In a 
case, in which a Mahoniedan vendor had deposited 
with the vendee the title-deeds of a certain estate as a 
security for his delivering up to the vendee the title- 
deeds of the property which had been sold to him, 
and which were not at the time in the possession of 
the vendor, Lord Kingsdown observed : " By the 
Mahoniedan law such a contract as the one under 
consideration for a security in respect of a contin- 
gent loss would be one not of pawn but of trust." 
( Varden Seth Sam v, Luk putty Royjee Lalla, 
9 Moore, p. 320.) 

We have seen that the pledgee had not, in the 
Mahoniedan law, an unqualified power of sale, 
and the reason why no improvement took place 
in this respect is not far to seek. The Mahouiedan 
law did not authorise the taking of interest, and 
this rule must have retarded the development of 
the law of pledge. We saw how common fairness 
suggested in Hindu law the rule by which the 
debtor was bound to redeem before the interest 
became equal to the principal. But no such liability 
was imposed upon the Mahoniedan debtor, because 
the pledge was thought to be a sufficient security 
so for as the creditor was concerned, and as the debt 



58 ORIGIN OF BYE-BIL-WAFFAS. 

LECTURE could not receive any accession, the creditor did 

1 not run much risk. The prohibition, however, 

relating to interest, led to the invention of the 
b/e-bil-waffa a kind of security analogous to the 
English mortgage, and possessing a very interest- 
ing history. 

The Mahomcdan creditor being prohibited by 
law from taking interest, hit upon the expedient of 
doing so under color of a sale with a clause for 
repurchase. Such a condition was perhaps strictly 
legal; but the Mahomedan lawyers ,were slow 
to recognise a transaction which had only the 
semblance of a sale, but which in reality was a 
loan repayable with interest. You will find the 
conflicting opinions of some of the most eminent 
Mahomedan lawyers on the point collected in 
Baillie's book on Sales. (SeeBaillie on the Maho- 
medan Law of Sale, pages 301 302.) 

The question seems to have been raised in a very 
c-arly case in the.Sudder Dewany Adawlut, when the 
Mahomedan Law Officers, who were consulted, gave 
the following opinion : " In the deed, there is first 
stipulated an absolute sale: afterwards, at the end 
of it, it is additionally stipulated, that, if the seller 
shall repay the purchase-money within a year, the 
.shall become void. The author of the Buhr-i- 
ravik says such a condition is illegal, except it be 
tor three days only, according to Huueefa and Aboo 
] )U t according to Moohummud it is legal, 



CONDITIONAL SALES AND BYE-BIL-WAFFAS. 59 

without restriction, as a sherti-khiar, or optional LECTURE 
condition." (Select Reports, Vol. I, page 76.) In 
a note to the case in which the above opinion was 
given, Mr. Macnaghten adds, " In the cause ' Busunt 
All against Ram Coomar] decided by the Sudder 
Dewany Adawlut, on the 4th of January 1799, there 
was a question put to the law officers respecting 
the legality of bye-bil-waffa sales, though the cause, 
as it happened, went off on a question as to the 
competency of the agent who made the bye-bil-waffa 
sale in that instance on the part of another. It was 
stated in the futwa then given, that a sale, with 
optional condition for three days, is good ; but for 
more than three days is not good, according to 
Himeefa and Yusof : but according to Moohunmiud, 
for four days, or even a longer period, is good: 
that the sort of sale being prevalent in the 
country, Moohummud's opinion should be followed. 
The intention of the parties, as collected from 
the tenor of the deed, shews whether the bye-bil- 
waffa be a sale with the reserve of an option of 
retractation within a limited time, or a mortsra^e 

' O O 

for the security of money lent. A stipulation for a 
short period must be considered to mark that a sale 
was in the contemplation of the parties; a long term 
denotes a mortgage, or security for a loan : and such 
mortgages in the form of conditional sales are very 
common, and rightly held valid under the opinion 
here cited." (Select Reports, Vol. I, page 77.) 



60 GRADUAL FUSION OF HINDU AND MAHOMEDAN LAW. 

The bve-bil-waffa is, however, regarded only in tlie 
lio-ht of a security, when any question arises as to its 
real character, and the debtor is regarded as the 
owner, notwithstanding the sale with a condition. 
Mr. Baillie refers to a case mentioned in the Eutwa 
of Abul Fuzzul, in which a person was allowed to 
assert a right of pre-emption, uotwithstading the 
ownership of the property, upon the foundation of 
which the right was claimed, had been transferred 
to another by a bye-bil-waffa. (Baillie's Malio- 
medan Law of Sale, p. 103.) This is no doubt a 
sensible view of the question, although it is ex- 
tremely open to doubt whether bye-bil-waffas would 
have obtained any recognition in the Mahomedan 
law, if the transaction had not originally masked 
itself as a sale with a clause of repurchase. 

I have brought down the history of bye-bil-waffas 
down to a comparatively recent period. As I have 
already said, the law relating to Ralm was also con- 
siderably modified in time, and hypothecation seems 
to have been common enough among the Maho- 
metans in this country when the earlier Regulations 
on mortgages were enacted. It would seem that 
by that time, the Hindu and Mahomedan law had 
born woldrd together, and the result was a mixed 

cm, which has since been brought to the shape 
in which we lind it by the infusion of some of the 
doctrines of the English Court of Chancery. 

In concluding this account of what I may call 



HYPOTHECATION. g I 

the early and mediaeval Hindu and Mahomedan LECTUEE 
law of pledge, I wish to call your attention to 
the fact, that neither of the two systems recognises 
any distinction between a pledge of rnoveables and 
a pledge of immoveables. 

A glance at some of the rules which we find 
will show that moveables alone were originally 
the subjects of pledge. Indeed, in the political 
and economic condition of ancient society, it 
could hardly have been otherwise. Land was of 
comparatively little value, while its alienation was 
guarded against with a jealousy common to all 
systems of archaic law. The necessity of trans- 
ferring the possession of the pledge to the creditor 
must also have proved a serious obstacle to land 
being given as a security. I speak with reserve, 
but the conjecture is plausible that as land gradu- 
ally increased in value, the rigor of the ancient 
rule was insensibly relaxed. The relaxation was 
probably at first confined only to immoveable pro- 
perty till in course of time it was extended to 
moveables. It is thus that in the Eastern, as well 
as in the Western world, the " substantial pledge " 
becomes ultimately "refined into the invisible 
rights of the hypotheca." 



LECTURE III. 



Conventional mortgages Different kinds of Simple mortgage Condi- 
tional sale Usufructuary Ottiof Madras Gahun I alien of Bombay 
Mortgage how created Writing not essential Effect of Registra- 
tion laws Parol defeasances inadmissible Mortgage by deposit of 
title-deeds Equitable mortgage in English law Memorandum 
True nature of Registration Proper subjects of mortgage 
General hypothecation invalid Capacity to mortgage Right of 
mortgagee to accessions Rights of mortgagor and mortgagee when 
pledge assumes a different form Byjnath Lall v. Ramdin Chow- 
dhry Power of sale in Mofussil mortgages Bhowani Churn Mitter's 
case. 

IN the present course of lectures I shall adhere 
to the classification of securities which we found 
in the Roman law. Following that classification, 
I propose in this lecture to make a few general 
observations upon the various kinds of conventional 
mortgages in use in India at the present day. 
From what I have already said, you must have 
;i that a creditor possessing a security may 
have either a right to sell the property mortgaged 
to him, or lie may become the absolute owner of the 
property, on default of the mortgagor to repay the 
money lent to him. In the first case, the creditor 
is not entitled to anything in excess of the debt 
and costs. In the second case, the creditor becomes 
entitled to the property, whatever may be its value. 



CLASSIFICATION OF CONVENTIONAL MORTGAGES. 63 

In either case, however, the creditor is wholly inde- LECTURE 
pendent of the debtor. There is, however, another 
way in which property may be given as a security, 
and that is by letting the creditor into possession, 
and permitting him to repay himself out of the 
rents and profits. Thus, we have three different 
kinds of securities all of which are to be found in 
India. The first is called a simple mortgage; the 
second, a conditional sale; and the third, a usu- 
fructuary mortgage. It is true they may be some- 
times found in combination, which gives rise to a 
greater variety; but the three I have mentioned 
are what I may call the primary divisions of Indian 
mortgages. There are in some parts of India par- 
ticular descriptions of mortgages peculiar to those 
provinces, as the Otti of Madras and the Gakun 
lahen of Bombay; but they do not possess much 
general interest, and one of them, the Gahun lahen, 
in its incidents, closely resembles the conditional 
sale of Bengal and the North-Western Provinces. 
I shall discuss the various rights and liabilities 
created by each of these kinds of mortgages in 
succeeding lectures. In the present lecture I 
I shall state the different ways in which conventional 
mortgages may be created, and the formalities which 
it is necessary to observe, ending with a few general 
observations on this class of securities. Neither the 
Hindu nor the Mahornedan law requires writing for 
the validity of any transaction, however solemn. 



(54 PAROL MORTGAGES. 

LECTUBE " Contracts of every description, involving both cor- 
- poral and spiritual consequences, may be made orally." 
(Per Holloway, J., 2 Mad., 37.) It is true that writing 
is often enjoined, particularly by Hindu lawyers, and 
preference, as we have seen, is sometimes given to a 
transaction evidenced by writing over a parol con- 
tract or transfer. But the fact remains that in no 
instance is writing absolutely necessary by law- 
Among Englishmen, however, who can only convey 
by deed, a parol mortgage is invalid at law. We 
shall, however, presently see that the strict rule of 
law has been broken in upon by the introduction of 
a class of securities, known as equitable mortgages, 
so called because they are only recognised by the 
Court of Chancery. Among Hindus and Maho- 
medans, however, a parol mortgage is as good as 
a morteasfe reduced to writing. This rule of 

CJ <J C- 

Hindu and Mahomedan law has been left untouched 
by the Legislature, notwithstanding the introduc- 
tion of a very stringent system of registration. 
In practice, however, mortgages are almost invari- 
ably reduced to writing; and the language of the 
earlier Regulations shows that the practice is by no 
means a recent growth. In conditional sales, how- 
ever, parol defeasances are not uncommon, although 
in recent years, they have become much less frequent 
than before. It must not, however, be understood 
that a verbal mortgage stands precisely in the same 
Situation as a written mortgage which has been regis- 



REGISTRATION OF MORTGAGES. (J5 

tered. The Indian Registration Acts, although they LECTUHB 
do not insist upon the necessity of a written instru- IIL 
ment, when the laws of the country do not require 
that the transaction should be evidenced by writino- 

J n ' 

give as a rule preference to registered instruments 
over parol agreements or declarations. Section 48 
of Act VIII of 1871, the present Registration Act, 
says, "All documents, not testamentary, duly 
registered under this Act, and relating to any pro- 
perty whether moveable or immoveable, shall take 
effect against any oral agreement or declaration 
relating to such property, unless where the agree- 
ment or declaration has been accompanied or 
followed by delivery of possession." 

The section is not very happily worded, and the 
meaning of the words "agreement" and "declara- 
tion" has given rise to some discussion. There 
can be no doubt, however, as explained by Mr. 
Justice Markby in Salim Sheik against Bydanath 
Ghuttuk, that the word " agreement" in the Act is 
not intended to be used in the sense of what English 
lawyers call an executory agreement. It evidently 
embraces conveyances as well as contracts. It 
seems to me, however, that the language is not very 
happily chosen, and plausible arguments may be 
urged in support of a different view. (12 W. R., 
p. 217.) 

While upon this subject a few words upon the 

real nature of a conventional mortgage may perhaps 

9 



gg CONSTRUCTIVE POSSESSION. 

LECTURE not be thrown away. A mortgage may be viewed in 

'. two different aspects. It is a contract creating a 

personal right so far as the promise of the debtor to 
repay the loan is concerned. But it is also a con- 
veyance in so far as it passes to the creditor a real 
right in the property, which is charged with the 
repayment of the money. Now a real right, as I have 
already explained to you, is never conferred by a 
contract; but a mortgage is looked upon so much 
as a contract that it is precisely one of those trans- 
actions in which we are most likely to confound a con- 
tract with a conveyance. I shall show hereafter the 
importance of this distinction which seems to have 
been overlooked in some of the cases in the books. 

Before dismissing the subject of registration, I 
wish to make one observation. You find that a 
purol mortgage is protected, only when it has been 
followed or accompanied by possession ; and the 
reason is because the actual deliver}' of possession 
gives publicity to the transaction, and thus lessens 
the chances of fraud. It is upon this ground that the 
Court has refused to extend the protection to a case 
in which a merely constructive possession is deli- 
\red to a person already in actual possession 
cither as tenant or under some other title. (Kirtee 
Cli under Haldar v. Raj Chunder Haldar, 22 W. It., 
p. 273.) 

I have already alluded to the practice which 
obtains in this country for the borrower, in the case 



PAROL EVIDENCE. (}7 

of a mortgage by conditional sale, to convey the LECTUBB 
estate absolutely to the lender ; the latter agreeing 
by a contemporaneous agreement, which is some- 
times verbal, that he will reconvey the estate to 
the borrower on repayment of the loan. The ques- 
tion whether such parol agreement could be re- 
ceived in evidence to control the terms of a docu- 
ment which was on its face a deed of absolute 
sale, was raised in the Calcutta High Court in the 
case of Kassinath Chatterjee v. Chundy Churn 
Banerjee (5 W. R., p. 68), and was referred to a 
Full Bench, when a majority of the Judges returned 
an answer in the negative. 

It is perhaps necessary to observe that the law 
laid down by the Court in Kassinaih Chatterjee 
against Chundy Churn Banerjee does not in any 
way trench upon any rule of Hindu or Mahoniedan 
law, neither of which, as I have already said, refuses 
to give effect to parol agreements. 

"Admitting that the law allows sale of laud 

O 

or other contracts relating to land to be made 
verbally, it does not follow that, if the parties 
choose to reduce their contract into writing, they 
can bring forward mere verbal evidence to contra- 
dict the writing, and to show that they intended 
something different from that which the writing 
expresses and was intended to express." " If a 
man writes that he sells absolutely, intending the 
writing which he executes to express and convey 



68 PAROL EVIDENCE. 

LECTUHE the meaning that lie intends to sell absolutely, 

'. he cannot, by mere verbal evidence, show, that at 

the time of the agreement, both parties intended 
that their contract should not be such as their 
written words express, but that which they 
expressed by their words to be an absolute sale 
should be a mortgage." (Per Peacock, C.J., in 
Kassinath Chatterjee against Chundy Churn 
Banerjee, 5 W. It., 68.) 

The exclusion of parol evidence for the purpose 
of qualifying the terms of a written instrument 
rests upon the presumption that when parties 
choose to reduce the terms of a contract to writing, 
they intend to insert the whole of the terms. Any 
other rule would open the widest door to fraud 
and perjury. 

A distinction, however, is taken by the Court 
between parol evidence of an agreement and evidence 
of the " acts " of the parties, the Chief Justice 
being of opinion that parol evidence is admissible 
to explain the acts of the parties, as for instance, 
that the document purporting to be a convey- 
ance was not accompanied or followed by posses- 
sion. 

It is perhaps not quite easy to discover the 
ground upon which the distinction is made, a 
distinction which, as pointed out by a learned 
Judge, is hardly n-concik-able with the principle 
upon which the exclusion of parol evidence is 



PAROL EVIDENCE. (jg 

founded. In the case of Madhub Chunder Roy LECTURB 
against Gungadhur Shamuniho, Mr. Justice Markby 
is reported to have said : 

" It seems to me to be very difficult to under- 
stand the distinction drawn between evidence of 
a parol agreement contradicting the terms of a 
written contract being inadmissible, and evidence 
of the parties contradicting the terms of such a 
contract being admissible. In all these cases, one 
starts with the proposition that there was a written 
instrument which unequivocally and unmistake- 
ably declares the intention of the parties, and I 
should have thought that it was quite as objection- 
able, if not more so, to contradict the plain terms 
of the contract by what are called acts, by the 
Full Bench, which can only lead to an inference, 
than to contradict them by an express and un- 
equivocal and unmistakeable parol arrangement 
between the parties. I should have thought that 
the principle was this, that when we have once 
got a clear expression in writing of that which 
professes to be the intention of the parties, that 
must conclusively be taken to be the relation which 
was intended to be created between them, and that 
to get at their intention, no other evidence, whether 
of contemporaneous acts or agreements ought 
to be admitted." (11 W. R., p. 451.) 

Since the above observations were made, the 
Legislature has passed the Indian Evidence Act, 



7Q EQUITABLE MORTGAGE. 

LECTURE section 92 of which says," When the terms of 
any such contract, grant or other disposition of 
property, or any matter required by law to 
be reduced to the form of a document, have 
been proved according to the last section, no 
evidence of any oral agreement or statement shall 
be admitted as between the parties to any such 
instrument or their representatives in interest, for 
the purpose of contradicting, varying, addding to, 
or subtracting from, its terms." 

The language of the Act is not, perhaps, wholly 
free from ambiguity, but I venture to think that, as 
the rule is laid down broadly and without any 
qualification or reservation, parol evidence of the 
acts or conduct of the parties is no longer admissible 
for the purpose of varying the terms of a written 
instrument. 

I have said that conventional mortgages may be 
created either by writing or by parol. They may 
also be either express or implied. There is one 
important class of mortgages, I say class, because 
in English law they form a class by themselves, in 
which the law implies a mortgage from the conduct 
of the parties. Thus, if money is borrowed on a 
deposit of title-deeds, the law implies an intention 
to charge the property covered by the title-deeds 
with the repayment of the money. This, I need 
hardly point out, is very different from a true Ir-.-il 
t-M-'c, which is not bused upon any express or 



EQUITABLE MORTGAGE. 71 

implied consent of the parties. In English law, a LECTURE 
mortgage of the kind is called an equitable mort- i 
gage, because following a well-known maxim, equity 
regards the transaction in the same light as a formal 
mortgage ; and this sort of mortgage being recog- 
nised in equity is called an " equitable mortgage" 
as opposed to a legal mortgage. The expression 
is also applied to similar transactions between the 
natives of this country, although, strictly speaking, it 
can be properly applied only in a country in which 
law and equity are administered as two distinct 
systems. 

Equitable mortgages, although very common in 
the Presidency towns, do not seem to be common 
in the mofussil. We, indeed, find an instance 
of it in an early case in the Sudder Dewany 
Adawlut, but the parties to the transaction seem 
to have been residents of Calcutta, and the differ- 
ence of opinion between the learned Judges by 
whom the appeal was heard, shows that the case 
was one of the first impression, and that the transac- 
tion was by no means common at the time. The 
report of the case to which I refer is not very full. 
It would, however, appear that one Ramlochun Paul 
being heavily indebted to the plaintiff and being 
pressed for payment, made over to him the title- 
deeds of certain property belonging to himself. It 
does not, however, appear that the debtor, when he 
made over the title-deeds, expressly stated his inten- 



72 EQUITABLE MORTGAGE. 

LECTURE tion to offer them as a security for the debt. The 
- property was afterwards sold under an execution by 
the Sheriff, and the purchaser bought with notice 
of the plaintiff's claim. The plaintiff sought to 
enforce his lien on the property, contending that 
the purchaser under the execution had purchased 
the property subject to his lien. The Zillah Judge 
having given judgment in favor of the plaintiff 
upon the ground that the deposit by the borrower 
of the title-deeds was equivalent to a mortgage, the 
decree was affirmed on appeal to the Sudder Dewany 
Adawlut, although, as I have already said, one of 
the Judges was inclined to think that the mere 
delivery of the title-deeds was not sufficient to 
clothe the creditor with the rights of a mortgagee. 
(6 Select Reports, p. 165.) Since the decision in 
the above case, the Mofussil Courts in Bengal 
have invariably given effect to a deposit of title- 
deeds as a valid simple mortgage, although, as 
I have told you, this is not an usual mode of 
giving security outside the Presidency towns. 

In the case which I have cited from the Select 
Reports, the Court inferred an intention to create a 
luort-.-i-c from the mere fact of the delivery of the 
title-deeds to the creditor. The deposit of title- 
deeds, however, is sometimes accompanied by an 
''(incut, either verbal or written, in which the 
intention to crea'e a charge is expressly stated. 
When tiiat is done, the transaction does not substan- 



III. 



EQUITABLE MORTGAGE. 73 

tmlly differ from an express conventional mortgage; LECTUBK 
and there is no reason why, as between parties who 
can pass land without writing and without delivery 
of possession, such a transaction should not be 

given effect to. In a case in the Madras Presidency, 

. ./ / 

m which the local Sudder Dewany Adawlut had 
refused to recognise the validity of such a transac- 
tion, Lord Kingsdown, in delivering the judgment 
of the Lords of the Judicial Committee of the Privy 
Council in appeal, is reported to have said : " The 
decision of the Sudder Dewany Adawlut, so far as 
it respects the enforcement of the lien against the 
third and last defendants, appears to have proceeded 
upon the ground that the principles of the English 
law applicable to a similar state of circumstances 
ought not to govern the decision of that suit in 
those Courts. This was correct if the authoritative 
obligation of that law on the Company's Courts 
were insisted on. There is, properly, no prescribed 
general law to which their decisions must conform. 
They are directed in the Madras Presidency to 
proceeed generally according to justice, equity, and 
good conscience. The question then is, whether 
the decision appealed against violates that direction 
or not. The Court of Appeal, reversing the prior 
decisions, has decided that the contract was not 
operative as a hypothecation, or pledge, even 
between the parties to it. Yet the evidence shows 
that the plaintiff looked not simply to the personal 

i i\ 



10 



74 EQUITABLE MORTGAGE. 

LECTUBE credit of the person with whom he contracted, but 
bargained for a security on land. If any positive 
law had forbidden effect to be given to the actual 
agreement of the parties to create that lien, the 
Court, of course, must have obeyed that law. If 
the contract of lien were imperfect for want of some 
necessary condition, effect must have been, in like 
manner, denied to it as a perfected lieu. But 
nothing of this sort is suggested in the pleadings, or 
proved. It is not shown that, in fact, the parties 
contracted with reference to any particular law. 
They were not of the same race and creed. By the 
Mahoniedan law, such a contract as the one under 
consideration, for a security in respect of a contin- 
gent loss, would be one not of pawn, but of trust. 
(Hedaya, Vol. IV, p. 208, tit. 'Pawns.') It is not 
declared that any writing or actual delivery is essen- 
tial to the creation of such trust by that law ; but 
as the contracting parties are not both Mahomedans, 
that law would not have governed the question of 
the validity and force of their contract, even in the 
Surpeme Court. The plaintiff is a Christian ; the 
contract took place with parties living within the 
local limits of the Supreme Court of Madras, though 

* "5 

it related to land beyond them. It is not shown 
that any local law, any lex loci rei sitae, exists, for- 
bidding the creation of a lien by the contract and 
deposit of deeds which existed in this case ; and by 
the -eueral law of the place where the contract 



EQUITABLE MORTGAGE IN ENGLISH LAW. 75 

was made, that is, the English law, the deposit of LECTURE 

title-deeds as a security would create a lien on '- 

lands, though, as between parties who can convey by 
deed only, or conveyance in writing, such lien would 
necessarily be equitable. In this case there is an 
express contract for a security on the lands, to which, 
no law invalidating it, effect must be given between 
the parties themselves." (9 Moo. Ind. App., 303.) 

I have said that equitable mortgages form a 
distinct group in the English law of securities. 
It was, however, very slowly that they found a 
place in that system, and their ultimate recognition 
is solely due to the action of the Court of Chancery. 
The Statute of Frauds provides that all agree- 
ments relating to any interest in land must be 
reduced to writing, and equitable mortgages were 
supposed to trench upon the statute. They were, 
however, admitted by the Court of Chancery by a 
somewhat refined distinction between executed and 
executory contracts. Equitable mortgages were 
first introduced by Lord Thurlow, but Lord Eldon 
and Sir William Grant were both averse to any 
extension of the doctrine. It was at first attempted 
to confine the rule only to those cases in 
which the delivery was made with the object of 
executing an immediate pledge; but the doctrine 
has since been overruled, and equitable mortgages 
have maintained their ground in English law, 
notwithstanding the jealousy with which their 



76 



EQUITABLE MORTGAGE IN INDIA. 



LECTURE introduction was at first regarded. We have here 
in. . , . 

an instance, by no means exceptional, in which 

the law has been compelled to yield to the exigencies 
of commerce. As observed by Lord Abinger, " In 
commercial transactions it may be frequently 
necessary to raise money on a sudden, before an 
opportunity can be afforded of investigating the 
title-deeds, and preparing the mortgage. Expediency, 
therefore, as well as necessity, has contributed to 
establish the general doctrine, although it may not 
altogether be in consistency with the statute." 
(Keys v. Williams, 3 Y. & C.. 61.) 

The objections, however, which apply to equitable 
mortgages in England, do not apply to them in 
India. The doctrine, therefore, has been firmly 
established in this country. A somewhat bold 
attempt was made to question it in a recent case 
in the Bombay High Court, but, as might be 
expected, it was unsuccessful. (7 Bom. High Court 
Rep., 45, Original Side.) 

I have already said that the expression " equitable 
mortgage " is not properly applicable to a transac- 
tion l>et \veen natives of this country, and if I use 
it, it is only out of deference to long continued 
USMLTO. The objection is not a mere verbal one. 
The case of LuchmiptUty and Seth Varden Sam 
shows the danger of extending technical English 
r\pivs>ions to transactions which have only a 
partial resemblance to the things denoted by such 



EQUITABLE DEFENCE. 77 

expressions. In the Madras case, the defendants LECTURE 
insisted in their defence upon the doctrine of the 
English Court of Chancery, that they were protected 
from the claims of the plaintiff as purchasers for 
value without notice. Now if you examine the real 
nature of an equitable mortgage in the English law, 
and that of a mortgage by delivery of title-deeds in 
India, you will find a very remarkable distinction. 
In the English law, an equitable mortgage is only an 
agreement to mortgage owing to the incapacity of per- 
sons subject to the English law to convey otherwise 
than by deed. In this country, however, there being 
no such restriction, a delivery of title-deeds of itself 
operates as a conveyance. Now, as I have already 
explained to you, a contract does not create any real 
right, although English Courts of Equity, proceeding 
upon a very sensible ground, treat the contract as a 
conveyance as against purchasers with notice of the 
agreement. In an English Court of Equity, therefore, 
a purchase for value without notice would be a 
perfectly good defence to a suit by an equitable 
mortgagee, but in this country it would not furnish 

C* O ' "* 

any answer, for the so-called equitable mortgage 
not being in any sense a contract for a mortgage, 
the Indian equitable mortgagee has a right superior 
to that of any person claiming under a title sub- 
sequently derived from the mortgagor. It seems 
to me that the defence in the Madras case, to which 
I have referred, was suggested by the use of the 




78 EQUITABLE MORTGAGE. 

LECTUBE unhappy expression " equitable mortgage " to denote 

1 the nature of the right of the plaintiff in that 

case. I think I have said enough to put you on 
your guard against the misconceptions, which an 
inaccurate use of technical terms, borrowed from 
an extremely artificial foreign system, seldom fails 
to occasion. (See, however, Bunsheedhur v. Heera 
Lall, 1 All., 166.) 

I have already stated that the deposit of title- 
deeds is sometimes accompanied by a memorandum 
in writing, setting forth the nature of the transac- 
tion. Even in this case, however, the memoran- 
dum is not the contract between the parties; but 
the contract is implied by the Court from the 
deposit of the title-deeds and the advance of the 
money on such deposit. In the case of a mortgage 
in writing, if the instrument is unregistered, the 
mortgagee cannot, generally speaking, enforce 
his security against the land, because the contract 
is evidenced by the instrument itself, and that 
being inadmissible in evidence, no other evidence 
is allowed to be given. In the case, however, of 
a mortgage by deposit of title-deeds, although 
t lie re may be a memorandum, the memorandum 
is not looked upon as the instrument creating 
the niortmmc, but, as observed by the Court in 
Kedarnath Duff and another v. Sham Lall Kheifn/ 
(*> \V. K., p. 150) "the mortgage is created 
by the agreement which is evidenced by the 



EQUITABLE MORTGAGE. 79 

loan and the deposit of the title-deeds. The LECTUBB 
mortgagee may, therefore, rely upon the parol agree- 1 
ment, which is implied by the deposit of the title- 
deeds. It must, however, be remembered that the 
mortra2:e would not be a morto-a^e in writing, but 

t-7 O O O O' 

a parol mortgage, and therefore subject to all the 
incidents of a parol mortgage. The distinction is 
an important one, and requires to be illustrated by 
one or two recent cases in which the question has 
been raised. In the case of Kedernath Dutt and 
another v. Sham Lall Khettry, to which I have 
already alluded, the facts were shortly these. The 
plaintiff, who asked the Court to declare his rights 
as an equitable mortgagee on certain premises, had 
advanced to Woomachurn Banerjee a certain sum of 
money on the deposit of the title-deeds of certain 
property, belonging to the borrower. Woomachurn 
also executed a promissory note, whereby he pro- 
mised to pay to " Sham Lall Khettry or order the 
sum of Rs. 1,200, with interest at the rate of 24 per 
cent, per annum, for value received in cash." There 
was an endorsement on the promissory note in these 
words: "For the repayment of the loan of 
Rs. 1,200, and the interest due thereon of the within 
note-of-hand, I hereby deposit with Baboo Sham 
Lall Khettry, as a collateral security by way of 
equitable mortgage, title-deeds of my property situ- 
ate at No. 11 in Fuckeer Chand Hitter's Street at 
Mirzapore in Calcutta." " Woomachurn Banerjee." 



80 EQUITABLE MORTGAGE. 

LECTURE There was some question as to whether the 
! transaction was completed when the promis- 
sory note was given, but the Appeal Court 
thought that the question whether there was a com- 
plete equitable mortgage before the promissory note 
was given, or whether that was the completion of 
the transaction, was not material. It seems that 
after the deposit of the title-deeds the property was 
sold under an execution against Woornachurn and 
purchased by the defendants Kedernath Dutt and 
Madhub Chunder Bose. These defendants resisted 
the plaintiff's suit on the ground that the mortgage 
was created by an express agreement which was 
reduced to writing, and, as the endorsement was not 
registered, the plaintiff could not enforce any claim 
against the land which, as I have already said, had 
intermediately passed to them under an execution 
against Woomachurn Banerjee. The objection, 
however, was overruled. Sir Richard Couch in 
giving the judgment of the Court observed : " The 
rule with regard to writings is that oral proof cannot 
be substituted for the written evidence of any con- 
tract which the parties have put into writing. And 
the reason is that the writing is tacitly considered 
by the parties themselves as the only repository 
and the appropriate evidence of their agreement. 
If this memorandum was of such a nature that it 
could be treated as the contract for the mortgage, 
and what the parties considered to be the only 



PAROL EVIDENCE. gj 

repository and appropriate evidence of their agree- LKCTUBB 
ment, it would be the instrument by which the 
equitable mortgage was created and would come 
within section 17 of the Registration Act. But it 
was not a writing of that character. As I have 
said, the equitable mortgage was created by the 
agreement which was evidenced by the loan and the 
deposit of the title-deeds. The promissory note, 
whether given either at the same time or some hours 
afterwards in pursuance of the understanding 
between the parties, was evidence of the terms upon 
which the loan was made, viz.) that the interest 
should be at the rate of 24 per cent. 

" But as regards the contract between the parties, 
if tbere had been no memorandum at all on the 
promissory note, there would have been a complete 
equitable mortgage. When we consider what the 
memorandum is, we find it is not the contract for 
the mortgage, not the agreement to give a mortgage 
for the Us. 1,200, but nothing more than a state- 
ment by Woomachurn Banerjee of the fact from 
which the agreement is inferred. It is an admission 
by him that he had deposited the deeds upon the 
advance of the money for which the promissory 
note was given. It is not by the memorandum that 
the Court takes the agreement for the mortgage to 
be proved, but by the deposit of the deeds. This 
is no more than a piece of evidence showing the fact 
of the deposit which might be proved by any other 






11 



82 EQUITABLE MORTGAGE. 

LECTURE evidence. The memorandum need not have been 
in. , 

produced. 

" On the ground, therefore, that this was not a 
writing which the parties had made as the evidence 
of their contract, but only u writing which was 
evidence of the fact from which the contract was 
to be inferred, I think it does not come within the 
description of documents in the 17th section of the 
Registration Act." (20 W. R., 150.) 

There is another case to be found in the books 
(7 Bombay, 50) which is somewhat stronger. In 
that case the plaintiff had agreed to lend a certain 
sum of money to Devji Keshavji on a deposit of 
the title-deeds of certain property belonging to the 
debtor. The title-deeds having been deposited, the 
plaintiff continued to advance certain sums of 
money from time to time till the whole sum advan- 
ced amounted to that which the plaintiff hud origin- 
ally agreed to advance. On the 13th of June 1865, 
after the Registration Act of 1864 had come into 
force, and when the last advance was made, a Guz- 
rati document was executed by the debtor in 
which, after stating the amount which had been 
advanced from time to time by the plaintiff, the 
debtor proceeded to say, " According to these parti- 
culars I have received or borrowed from you at 
interest Rs. 25,000 in cash and currency notes. 
( Mi account of the same (there are mortgaged) at 
your place my piece of land at Niiigani, namely, a 



PAROL EVIDENCE. go 

garden with a building (or) a bungalow, which LECTUBB 
(land) is registered under No. 36 in the Collector's 
books, and the building or dwelling-house built on 
the said piece of land that is registered under 
No. 9 in the books of the house-assessment Col- 
lector. All the deeds and other 'vouchers' relating 
to the said land having been left in mortgage at 
your place, Rs. 25,000, namely, twenty-five thou- 
sand, have been received (or borrowed) at interest 
thereon for an unlimited time." 

This document was not registered, and the ques- 
tion arose whether the writing being inadmissible 
in evidence, the plaintiff could enforce his rights 
as mortgagee. The question was answered in 
the affirmative, and Mr. Justice Bayley in givin- 
judgment is reported to have said : " I consider that 
the contract for a security on the land was created 
when the loan was applied for and agreed to, and 
the deeds were handed over to Karsandas; and that 
the receipt then and those subsequently given did 
not, nor did the Guzrati document of the 13th of 
June 1865, on which day Rs. 25, the last instalment 
of the Rs. 25,000, was advanced, create or declare 
any right or interest within the meaning of the Regis- 
tration Acts. The rights of the parties, be they 
legal or be they equitable, had already been created 
and perfected on the 31st of October 1864, and it 
required no memorandum or writing to render such 
rights valid, nor in fact was there evidence that any 



84 PAROL EVIDENCE. 

LECTURE such document, or any deed or writing, was on the 
'- 31st of October 1864 contemplated by the parties. 
Suppose the receipts and the instrument of the 13th 
of June 1865 had never existed, the lien or charge 
on the property would still, in my opinion, have 
been perfect and valid. The fact of such informal 
native document being subsequently given and 
executed after the transaction had been completed, 
cannot, I think, in any way be held to affect the 
validity of that which Sir Lawrence Peel, in the 
Calcutta case, calls a perfected contfact of pledge, 
or, to borrow the words of Lord Kingsdown, was a 
' contract which created between the parties a lien 
on the land' 

" In general, no doubt, where a contract has been 
reduced into writing by the parties, the writing is the 
best evidence of it, and must be produced. But it is 
not in every case necessary, where the matter to be 
proved has been committed to writing, that the 
writing should be produced. If, for instance, the 
narrative of an extrinsic fact has been committed to 
writing, it may yet be proved by parol evidence. 
I pon this principle a receipt for money given on 
unstamped paper will not exclude parol evidence of 
the payment, and the paper on which it is written 
may IK; produced not as evidence of itself, but as 
a material memorandum which a witness who saw 
it given may refer to, and give parol evidence 
of the fact of payment. (Rambert v. Cohen; 



FORMAL MORTGAGE. 85 

1 Taylor on Evidence, p. 412, 5th ed.) So LECTUBB 

a verbal demand of goods is admissible in 1 

trover, though a demand in writing was made 
at the same time : Smith v. Young. The fact, 
too, of birth, baptism, marriage, death, or burial 
may be proved by parol testimony, though a narra- 
tive or memorandum of these events may have been 
entered in registers which the law requires to be 
kept, for the existence or contents of these registers 
form no part of the fact to be proved, and the entry 
is no more than a collateral or subsequent memorial 
of that fact, which may furnish a satisfactory and 
convenient mode of proof, but cannot exclude 
other evidence, though its non-production may 
afford grounds for scrutinising such evidence with 
more than ordinary care." (7 Bombay, 62-63.) 

These cases, therefore, show that where the con- 
duct of the parties is such as to raise the inference 
of a mortgage, such conduct may be relied upon, 
although there may be a statement of fact in 
writing from which the same inference may be 
made. If, for instance, I borrow money on the 
deposit of title-deeds, I may state the fact of deposit 
in writing, but the writing is not the only evidence 
of such deposit, and it may be proved by other 
means. If, however, a formal document is executed, 
I apprehend such document must be taken to be 
the only evidence of the transaction, although there 
are certain expressions in the judgment of the 



86 REGISTRATION. 

LECTURE Bombay Court which might perhaps lead to the 
- inference that even in such a case the parties might, 
so to speak, go behind the writing and rely upon 
the deposit coupled with the advance. If such was 
really the meaning of Mr. Justice Bayley, I venture 
to say, with great deference, that the dictum cannot 
be supported to that extent. The distinction is 
clear between a writing containing a statement of 
fact from which the Court may infer a contract, and 
a document in which the contract itself is reduced 
to writing. 

From what I have already said it is clear that a 
memorandum of the description mentioned above 
is not a document the registration of which is com- 
pulsory. This was substantially decided in both the 
cases I have mentioned. I have gone at some length 
into the subject because I think the nature of what is 
called an equitable mortgage cannot be properly 
understood without a careful study of the distinction 
between mortgages of this class, and what I have 
called express conventional mortgages; and this dis- 
tinction is very clearly brought out in the cases in 
which questions of the admissibility of the memo- 
randum, which sometimes Accompanies the deposit, 
have been raised. 

I Lave already said that an equitable mortgage, 
although it may be accompanied by writing, is still 
only a parol mortgage. It is, therefore, liable to all 
the disadvantages imposed by the Registration Acton 



PROPER SUBJECTS OF MORTGAGE. 

parol transactions. If the mortgage is not followed 
or accompanied by possession, and equitable mort- 
gages are very seldom followed by delivery of pos- 
session, it is liable to be postponed to subsequent 
incumbrances wbich may be registered. A some- 
what difficult question may perhaps arise if the 
memorandum is registered, but that is not generally 
practicable owing to the provisions of the Registra- 
tion Act; Section 21 of which says, " No document, 
not testamentary, relating to immoveable property, 
shall be accepted for registration unless it contains a 
description of such property sufficient to identify 
the same." Even if the memorandum accompany- 
ing an equitable mortgage be registered, I should 
venture to think that the mortgagee would not be 
in the same position as one who holds a regis- 
tered express conventional mortgage. 

To go back. Every species of property, whether 
moveable or immoveable, which can be alienated, 
may be also the subject of mortgage, but it seems 
that a general hypothecation will not be recognised 
as valid by our Courts. (N. W. P., Vol. VII, p. 265; 
S. D. A., 1855, p. 353; compare 2 All., 263). The 
question, however, is not now of much practical 
importance, as no document which does not suffi- 
ciently specify the property comprised in it, can be 
registered, and a general hypothecation, therefore, 
cannot be created by registered instrument. 

As regards the power to mortgage, it may be said 



JII. 



88 CAPACITY TO MORTGAGE. 

LECTURE that, generally speaking, a mortgage being a quali- 
- fied alienation, the same rules which regulate the 
power to sell also regulate the capacity to mort- 
gage. A detailed examination of these rules, which 
you will find in Mr. Justice Macpherson's treatise on 
Mortgages, would carry me much beyond the range 
of the present lectures. A doubt may, however, some- 
times arise when trustees are empowered to sell, and 
no express power to mortgage is given. The law on 
the subject in England is that a trustee empowered to 
sell has presumably the right to mortgage, except 
when there is clear indication in the language of the 
intrument that no such authority was intended to be 
given. The question does not seem to have been 
ever distinctly raised in this country ; but there can 
be no doubt that if it should arise the point will be 
decided in the same way. 

I shall now proceed to discuss the rights of the 
mortgagee, when the property pledged to him 
has received any accession, or undergone any 
alteration. The general law on the subject is 
that the creditor has not only a right against the 
property mortgaged to him, but also to any aug- 
mentation or increase. Thus, if a flock of sheep 
be mortgaged, the creditor acquires the same rights 
to any natural increase, as he has against the 
animals which composed the flock at the time of 
the mortgage. On the same principle, accessions 
to the mortgaged property by alluvion become 



RIGHTS OF PLEDGEE. ft() 

subject to the mortgage. In some systems of law, LECTUBB 
the right of the mortgagee to whom land has been '- 
pledged extends to any buildings which may be 
subsequently erected by the debtor on the land. 
The right has not, however, so far as I am aware, 
been carried to a similar extent in India. 

The right of the mortgagee will, however, not 
extend to anything which was never pledged to 
him, although it may be substituted in the place 
of the property originally pledged. Thus, to take 
a familiar instance from the Roman law, if a farm 
together with the slaves upon it be pledged, and 
the slaves die and are replaced by others, the right 
of the creditor shall not extend to the latter, 
except, as I have already said, where they are the 
issues of the deceased slaves. 

This limitation of the right of the creditor how- 
ever must not be confounded with cases in which 
the pledge is not actually destroyed, but to use 
the language of Sir James Col vile, only " assumes a 
new form." 

A question of considerable nicety on this point 
arose in the case of Byjnath Lall v. Ramdin 
C/iowdhry, which was heard in the last resort by 
the Lords of the Judicial Committee of the Privy 
Council. In the case before the Privy Council, which 
was heard on an appeal from a decree of the Calcutta 
High Court, the facts were somewhat peculiar. 

It seems that the mortgagor Gopalnaraiu Dass 

1-2 



90 EIGHTS OF PLEDGEE. 

LECTURE was, when lie executed the deed of conditional sale, 
'. which was the foundation of the plaintiffs title, the 
undisputed owner of an eight-anna undivided share 
in an estate consisting of three Asli mouzas called 
Gunniporebija, Peniburiuda and Tajpore Ruttom- 
pore, to each of which certain Dakhila villages were 
appurtenant. There was no partition or division 
among the shareholders, and the interest of the 
mortoa^or therefore in the whole estate was an 

o o 

undivided moiety. In this state of things Gopal- 
narain executed the mortgage, out of which the 
suit arose, of the whole and entire eight-anna 
of the whole 16 annas of Mouzas Guuniporebija 
and Pemburinda, expressly excepting from the deed 
the eight annas of Tajpore Ruttompore. It should 
seem that before the execution of the mortgage, 
application had been made by some of the co- 
shurers of the mortgagor for a partition of the 
estate under Regulation XIX of 1814. A partition 
was made by the Collector, and the result was that, 
instead of an undivided moiety of the whole estate, 
the whole of Mouza Pemburinda, the whole of 
Tajpore Ruttompore, and whole of another mouzu, 
a dependency of the third Mouza, Gunniporebija, 
were allotted to Gopalnarain, to be held by him in 
eeveralty. Shortly after the partition, Gopalnarain's 
rights and interests in the mouzas, which fell to his 
share, were sold at execution sales, and purchased 
by certain persons, who were the substantial defend- 



RIGHTS OF PLEDCKK. 91 

ants, and who resisted the right of the plaintiff, the 



1 1 1 
mortgagee, to take anything under his mortgage 

deed in excess of the eight-anna share of thr; 
mouzas which had been mortgaged to him, the 
mortgagee insisting upon his right to the whole 
sixteen annas of the mouzas which fiad fallen to the 
share of the mortgagor in lieu of the undivided 
moiety whicli was held by the mortgagor at the 
time of the execution of the mortgage. The Court 
of first instance gave judgment in favor of the 
plaintiff, proceeding upon the principle that the 
mortgagee was entitled to whatever was allotted 
to the mortgagor on the partition in lieu of his 
undivided eight-anna share in the Mouzas Gunni- 
porebija and Pemburinda, which was the subject of 
the mortgage. On appeal, however, to the High 
Court, the right of the mortgagee was limited to the 

o o o 

share which was expressly named in and covered by 
the mortgage deed, i.e., only to an eight-anna of 
Mouza Pemburinda and an eight-anna share of 
Mouza Gunniporebija. The case then went on 
appeal to the Privy Council, and the Judicial Com- 
mittee affirmed the decree of the first Court, and 
declared that the principle laid down by the first 
Court was correct. In giving the judgment of the 
Privy Council, Sir James Colvile is reported to have 
observed : " Let it be assumed that such a partition 
has been fairly and conclusively made with the 
assent of the mortgagee. In that case, can it be 



92 POWER OF SALE. 

LECTURE doubted that the mortgagee of the undivided share 
of one co-sharer (and for the sake of argument, 
the mortgage may be assumed to cover the whole 
of such undivided share), who has no privity of 
contract with the other co-sharers, would have no 
recourse against the lands allotted to such co- 
sharers ; but must pursue his remedy against the 
lauds allotted to his mortgagor, and, as against him, 
would have a charge on the whole of such lands. 
He would take the subject of the pledge in the new 
form which it had assumed. In the present case there 
is not a suggestion of fraud, nor is there any 
ground to suppose that the partition was other 
than fair and equal. The mortgagee is content 
to accept what has been allotted in substitution 
of the undivided interest as the fair equivalent of it. 
Their Lordships are of opinion, not only that he 
lias a right to do so, but that this, in the circum- 
stances of the case, was his sole right, and that 
he could not successfully have sought to charge 
any other parcel of the estate in the hands of 
any of the former co-sharers. There is, therefore, 
no question here of election, or of the time when 
the election was made." (21 W. R., p. 237; com- 
pare N. W. P., Vol. VIII, p. 669; S. D. A., 1857, 
p. 359.) 

I shall now proceed to consider the validity of 
a power of sale contained in a mofussil mortgage. 
The question appears to have been for the first 



POWER OF SALE. 93 

time raised in the case of Bhowani Churn Miller v. L Ef : 
Joykishen Mitter, heard before the late Sudder 
Dewany Adawlut of Calcutta in the year 1842, 
when the Judges were unanimously of opinion that 
a sale by the mortgagee under the power did not 
pass a valid title to the purchaser. 

The decision has been criticised by Mr. Justice 
Macpherson in his work on Mortgages (pp. 45 47), 
and there is no doubt that some of the reasons given 
by the learned Judges will not bear examination. 
But the judgment of the Court substantially rests 
upon the broad ground that it would be inexpedient 
to allow the mortgagee in this country to exercise 
the power. It is true that such a power has 
been found beneficial in England, but English mort- 
gagors as a class are perfectly competent to take 
care of their own interests. In India, however, 
we have to deal with a very different order of 
men. The mass of mortgages in this country 
consist of mortgages of ancestral fields by ignorant 
ryots to a class of people not remarkable for their 
scrupulousness, and any one having experience of 
Indian litigation, must admit the danger of arming 
our money-lenders with the right to sell the 
properties pledged to them without the interven- 
tion of a Court of Justice. As observed by the 
Court in Bhowani Churn Mitter v. Joykissen 
Mitter . " This Court has only to declare such a 
condition Wai, and in the course of a short time 

O ' 



94 POWER OF SALE. 

LKCTURE not a mort^n^e bond would be without it. Tlie 
1 1 1 
'- mortgagee would then sell his debtor's property 

to suit his own time, aud in such manner and with 
such publicity and formalities as he thought 
proper. Fraud, it is to be feared, would frequently 
accompany the transfers, and the property fall into 
the hands of the mortgagee, or some of his con- 
nexions (even as in this case it is alleged the pur- 
chaser is the son-in-law of the mortgagee) at an 
inadequate price, leaving the lender at liberty still 
to pursue the borrower for the balance that may 
remain after the sale." (7 Select Reports, p. 429.) 
With reference to the argument that the exercise 
of the power of sale was not unfair to the debtor, 
the learned Judges observe: "It is urged for the 
plaintiff that the public sale of the mortgagor's 
property cannot be a disadvantageous mode of 
proceeding towards the latter, that his property 
is .sold to the highest bidder, and that if a surplus 
remains it belongs to himself. We have not to 
deal with abstract theories or bare possibilities, 
but with what experience and the principles of the 
Regulations furnish us, as our guides in the deter- 
mination of a novel and unprecedented case. In 
a case of execution of a decree of Court, the 
proclamation of sale is an invitation to others 
interested to come and state their claims. If no 
claim is preferred, the title of the purchaser may 
.rally be considered a pretty fair one. It' claims 



POWER OF SALE. 95 

are preferred, they are summarily investigated, and, LECTUBB 
should they appear fraudulent, are rejected; and 
io this case, too, the purchaser may generally be 
considered in a good position, as few are willing 
to incur the expense of a regular action on grounds 
already declared by a Court of Justice to be primd 
facie fraudulent. And yet, with all the formalities 
and securities of a transfer of real property by 
sale made by a Court of Justice, how frequent 
are the complaints that the property has been sold 
at an inadequate price, how much more frequent 
would they be, had not this Court held that inade- 
quacy of price, at a regularly conducted sale, 
forms no ground for its reversal ! If such be the 
case in such sales, the evils to be apprehended 
from permitting private individuals to sell their 
debtor's property, in satisfaction of their claims, 
must be ten-fold. But few purchasers at a fair 
price will be found, when, in all probability, a law- 
suit (as the order granting the review expresses 
it) will be tacked to the purchase. The object 
of the Regulation is to prevent improvident and 
injurious transfers of landed property at an inade- 
quate price; the result of such a practice as that 
which the contract before us involves would be 
to render them universal." (7 Select Report, pages 
440-41.) 

It is true that the utmost latitude ought to be 
given to the parties to contract in any manner they 



96 FRENCH CODE NAPOLEON. 

LECTURE please, but freedom of contract wears a very different 
in. 

aspect according as it is allowed to the English 

landowner or the Hindu ryot, and I am fortified 
in my view by the recommendation of the Indian 
Law Commissioners, who propose in their Sixth 
Report that a sale under a mortgage should in 
every case be conducted by the Court. (See also 
the observations of Melvill, J., in Kesub Rao v. 
Bhowaneejee, 8 Bom., p. 142.) 

We have already seen that in most continental 
systems a sale without judicial process is absolutely 
void. Article 2078 of the French Code says," The 
creditor cannot in default of payment dispose of 
the pledge, saving to him the power of procuring 
an order of the Court that such pledge shall con- 
tinue with him in payment, and up to its due 
amount according to an estimate made by com- 
petent persons, or that it shall be sold by auction." 

" Every clause which shall authorise the creditor 
to appropriate the pledge to himself, or to dispose 
thereof without the abovementioned formalities, is 
void." 

You will remember that the French Code, equally 
with the other systems of law on the Continent, is 
largely shaped by the Roman law, and if the power 
which the Roman pledgee possessed has not been 
retained in those systems, it may fairly be presumed 
that the exercise of the power is not suited to every 
condition of society. But for the peculiar economic 



POWER OF SALE IN ENGLAND. 



97 



conditions under which land is owned in Eniiland, LECTUBE 

in. 
it may indeed fairly be doubted whether the system 

would have worked well even in that country. Be 
that, however, as it may, there can be no doubt 
that it would be dangerous to trust the Indian 
money-lender with a power which is so much liable 
to abuse. (See Appendix I.) 



1., 



LECTURE IV. 



SIMPLE MORTGAGES. 

What constitutes simple mortgage Conflicting dicta Nature of security 
possessed by simple mortgagee How made available Decree for sale 
What passes under such decree Rights of puisne encumbrancers 
Haran Chunder Ghose against Dinobundhu Bose Law of execution 
Practice of Continental Courts Effect of clause against alienation 
in mortgage deed Lis pendens Mortgagee not bound to proceed 
against pledge May waive his rights as mortgagee Sale of property 
" subject to mortgage "Sec. 271 of Act VIII of 1859 Sec. 270 how 
construed Right of simple mortgagee, a real right Defence of pur- 
chase for value not available Period within which security must 
be enforced Court in which mortgagee must sue Conflicting deci- 
sions on the point. 

A SIMPLE mortgage is a mortgage in which the 

Cj O O O 

land is pledged as a collateral security, the right of 
the creditor in default of payment being limited 
to a sale by judicial process of the land hypothe- 
cated to him. In this kind of mortgage the per- 
sonal liability of the mortgagor is not excluded. 
It corresponds to the hypothecation of the Civil law 
and the systems of law which are founded upon 
it. In a pure simple mortgage the mortgagor is not 
put into possession of the property pledged to him. 
lie has not, therefore, the right to satisfy the debt 
out of the rents and profits, nor can he acquire the 
absolute ownership of the estate by foreclosure. 



WHAT CONSTITUTES A MOBTGAGE. 99 

No particular form of words is necessary to con- LECTUBH 
stitute a simple mortgage. Difficulties, however, IV " 
not unfrequently arise owing to the extremely 
inartificial language of Indian instruments. In tiie 
case of Gunga Persaud Sing v. Lalla Behary Lall, 
in which the question arose whether a bare cove- 
nant by the debtor not to alienate his property 
till the debt should be repaid, constituted a simple 
morts;a2;e so as to confer a real rio-htonthe creditor, 

O O O 

the Court observed : " As a general rule we adhere 
to the principle laid down in the case of Chunder 
Kishore Surma (9th July 1855), that the title of 
a person who purchases in good faith is not vitiated 
by any contract into which the vendor may have 
previously entered with a stranger binding himself 
not to alienate his property. If a party is desirous 
of obtaining a valid lien on any particular property, 
he should adopt the simple means which the various 
kinds of mortgage in use in this country afford. 
If he does not choose to do so, the fault is his 
own, and the innocent purchaser should not be 
made to pay the penalty of his negligence." ( S. D. A., 
1857, p. 825.) 

It may, no doubt, be said that such a doctrine 
would very frequently defeat the intentions of the 
parties ; but the rule of construction founded on 
the presumed intention of the parties, unless care- 
fully fenced in, is calculated to introduce the very 
greatest confusion. It would carry me much 






] 00 RULE OF CONSTRUCTION. 

LKCTI-RE bevoiul the limits of the present lecture to examine 
the various aspects of this doctrine, and there 
are probably many among you who are familiar 
with the controversies on the point in some famous 
writings, both ethical and juridical. There is, how- 
ever, a speciousness about the rule which is 
betrayed only on a close examination. It is true 
that if the intention can be collected from the 
instrument, the form of expression is not material. 
But the real difficulty lies in collecting the inten- 
tion when it is not formulated in apt words. 

In the Reports of the Agra High Court you will 
find two cases, in one of which the Court thought 
that the debtor intended to create a mortgage, 
while in the other it was held that there was nothing 
to show an intention to create a charge on any pro- 
perty. The language of the two instruments, so 
far as can be gathered from the report, was almost 
precisely the same, the debtors covenanting with 
their creditors in both the cases not to alienate 
their properties till the debts were repaid. ( Chwit'jj 
Lall v. Pallowun Sing, 4 Agra H. C., 217 ; Martin \. 
Purrissrum, 2 Agra H. C., 124. See also 7 W. R., 
309; 13 W. R.,F. B., 82 ; compare N.W. P., vol. VH, 
]>. 124 ; vol. VIII, p. 669.) The caustic observations 
of Mr. Fearne on Perrin v. Blake will suggest 
themselves to every one familiar with the writings 
of that accomplished lawyer. 

1 will now proceed to discuss the rights of the 



DECREE FOR SALE. ] ( ) [ 

mortgagee under a simple mortgage. We have LF, 
seen that he has no right to enter upon possession - 
of the property mortgaged to him, or to foreclose 
the mortgagor's equity of redemption. The only 
mode in which he can avail himself of his security 
is by a sale through judicial process of the pro- 
perty pledged to him under a decree of the Court, 
the mortgagee having a right to be paid out of the 
purchase money. 

According to the usual practice of the moftissil 
Courts the mortgagee asks by his plaint for the sale 
of the mortgaged property, and if he succeeds lie 
obtains a decree for the money due to him with a 
declaration that the mortgaged property should be 
sold for the realization of the money. I may men- 
tion that in the Madras Courts a period of six 
months is usually allowed to the mortgagor to pay the 
money found due to the mortgagee on his security. 
This indulgence, however, which seems to be bor- 
rowed from the practice of the English Court of 
Chancery, is not allowed to the mortgagor elsewhere, 
and the propriety of extending it to a decree for 
sale is perhaps open to question; such a decree 
standing upon very different ground from a decree 
for foreclosure. Even in England an immediate 
decree for sale is not unfrequently made by the 

question, however, is not of much practical 
;ance, and I have referred to it only to show 



102 DECREE FOR SALE AND MONEY DECREE. 

LECTURE how largely even in details our law of mortgage is 
- shaped by the practice of the English Courts of 
Equity. 

It used to be thought at one time that a pur- 
chaser under a decree which did not direct a sale? 
acquired no higher rights than one under an 
ordinary execution. Those cases, however, are no 
longer law, and it is now settled that the mortgagee 

o ' o o 

conveys to the purchaser the benefit of his own lien 
and the equity of redemption of the debtor, as well 
when the sale is under a decree for sale as when it 
is under a " money decree." (Haran Chunder 
Ghose y. Dinobundhoo Bose, 23 W. ., 186.) 

The doctrine that a sale under a money decree 
passed to the purchaser only the rights and inter- 
ests of the debtor, was apparently founded on the 
notion that the mortgagee by accepting a money 
decree waived the benefit of his lien, for it could 
not be contended with any show of reason that 
the mortgagee, notwithstanding the sale, would retain 
the benefit of his security. But if the doctrine rested 
on any such notion, it was not reconcileable with the 
principle recognised in a large number of cases that if 
the mortgagee was unable to take the land mortgaged 
to him in execution of a money decree, he might bring 
a fresh suit for the purpose of making his security 
available on the land. It is, however, unnecessary 
to pursue the discussion further, as the cases in 
which the right of the purchaser was limited to 



WHAT PASSES UNDER SALE. 103 

the bare equity of redemption possessed by the LECTUBE 
mortgagor, if the decree was only for money, are 
no longer law. 

The Full Bench ruling, however, made another im- 
portant alteration in the law as it was previously 
understood. It used to be thought that a sale under 
a mortgage passed the property to the purchaser as 
it stood at the date of the mortgage, and that a 
decree for sale made in the presence of the mort- 
gagor, but in the absence of the puisne encum- 
brancers or other persons possessing only a quali- 
fied interest in the equity of redemption, was a 
good decree and passed a complete title to the 
purchaser. 

As the law, however, now stands, it would not 
be safe for the mortgagee to sell the property 
pledged to him under a decree not made in the 
presence of the subsequent encumbrancers, who 
cannot be concluded by an order for sale made in 
their absence. 

"If there be persons not parties to the suit claim- 
ing an interest in the property, no form of dealing 
with the property in their absence can prejudice 
their rights." (Per Couch, C.J., in Haran Chunder 
Ghose v. Dinobundhoo Bose, 23 W. R., 190.) 
The rights, however, of the subsequent encum- 
brancers are nowhere defined in the judgment. 
It is only said that the purchaser under a decree 
made in their absence purchases the property sub- 



104 PUISNE ENCUMBRANCERS. 

LECTURE j c ct to their rights. He buvs the lien of tlie cre- 
iv. J 

ditor and the equity of redemption of the debtor, 
the entire interest which they could jointly sell, 
and if there are no third persons interested in the 
property, it becomes absolutely vested in the pur- 
chaser. 

The doctrine, therefore, which is to be found in 
some of the cases in the books that a sale by a 
mortgagee conveys the property to the purchaser 
free of all subsequent encumbrances must now be 
received with some qualification. A mortgagee is 
no doubt competent to transfer the property to the 
purchaser in the state in which it was pledged to 
him, but this can only be effected by a sale under 
a decree in which the subsequent encumbrancers are 
represented. If the sale take place under a decree 
against the mortgagor alone, no complete title 
passes to the purchaser. 

I have already said that the Court did not, in 
the case of Haran Chunder Ghose, define the 
rights of the subsequent encumbrancers as against 
the purchaser under a decree made in their ab- 
sence. 

The question, however, arose in the subse- 
quent case of Nobocoomar Ghose against 
SMkdctT) in which the debtor having mortgaged 
his property to two persons in succession, the 
lirst mortgagee brought a suit and obtained a 
decree, but only agaiiiot the debtor. The property 



PUISNE ENCUMBRANCERS. 105 

was sold under the decree and purchased by the LECTURE 
mortgagee himself. The second mortgagee also 
sued the debtor, and the property was again sold 
under the decree and purchased by the creditor. 
The Court held that the purchaser under the first 
decree was entitled to possession, but that, as the 
puisne mortgagee was not a party to the decree 
under which the purchaser acquired his title, the 
purchaser under the second decree had a right to 
pay off the amount due under the first mort<rao-e, 

O O * 

and that upon such payment he would be the 
" holder of the first charge " on the property. You 
will observe that this case recognises the right of 
a puisne encumbrancer to pay off the debt on 
account of which the estate may have been sold, and 
thus to treat the purchaser as the owner of the estate 
subject to his claim. As to the question of posses- 
sion the Court held that the right to the possession 
was in the debtor and passed to the purchaser 
under the first execution. The question which we 
are now considering is a somewhat difficult one, and 
I shall, therefore, try to illustrate the principle laid 
down by the Court by putting a hypothetical case. 
Now suppose an estate is worth Rs. 20,000, and 
that it is mortgaged first to A for Rs. 15,000 and 
then to B for Rs. 3,000. The interest which 
remains in the debtor after the execution of the 
mortgage is, therefore, worth only Rs. 2,000. Now 
suppose the property is sold by A in execution of a 



10(> RIGHT OF REDEMPTION. 

decree against the debtor and in the absence of B. 

j \ 

The purchaser purchases only the lien of the creditor 
and the right of redemption subsisting in the debtor, 
which together is by the hypothesis worth Rs. 15,000 
plus 2,000 == Rs. 17,000. Now B would have a right 
to pay off the debt due under the first mortgage, and 
to treat such payment, together with the amount due 
to him, as a charge on the property, i.e., by paying 
off to the purchaser the fifteen thousand due under 
the first mortgage, he would acquire a charge on the 
property for Rs. 15,000 plus 3,000 =="Rs. 18,000. 
Now, in order to enforce that charge he would have 
to bring a suit against the purchaser who, as we have 
seen, has acquired the right of redemption of the 
debtor. Now if the purchaser pays him off, he 
acquires an absolute title to the property. But in 
that case he would have to pay altogether Rs. 17,000 
minus 15,000, i.e., Rs. 2,000 plus 18,000 == 20,000, 
which we have assumed to be the value of the property. 
Jjiit suppose the purchaser does not choose to pav 
off the consolidated charge on the property, the 
property must be sold, and assuming that it fetches 
its proper price, the mortgagee gets Rs. 18,000, and 
tho purchaser gets back the two thousand rupees 
which he had laid out. If the property is so heavily 
burdened that the right of redemption is worth 
nothing, the purchaser would not be safe in paying 
anything in excess of the debt due under the first 
mortgage. To that extent lie would be secure 



EIGHTS OF LESSEES. 

against the claims of subsequent encumbrancers. LECTUBB 
If the purchaser pays less than the amount of the 
debt secured by the first mortgage, he cannot insist 
upon the second mortgagee paying to him anything 
in excess of the purchase money, although I am not 
to be understood as saying that the case might not 
be different if the creditor himself became the 
purchaser. 

The principle applicable to subsequent mort- 
gagees has been extended on the authority of Haran 
Ckunder G/tose v. Denolundhoo Bose to other 
persons possessing a qualified interest in the equity 
of redemption lessees, for instance, holding under 
beneficial leases created subsequently to the mort- 
gage. 

In the case of Byjnatli Singh v. Goburdhun 
Lall (24 W. R., 210) the purchaser under a sale by 
the morto-arree sous-lit to set aside a lease created by 

O i_j O J 

the debtor subsequently to the mortgage. The lessee 
was not a party to the suit by the mortgage creditor, 
and the order directing the sale was made in his 
absence. It was contended on behalf of the pur- 
chaser under the execution that the lessee was not 
a necessary party to the suit, and that as the lease 
had been executed subsequently to the mortgage, it 
was not binding upon the purchaser. The Court, 
however, held otherwise, being of opinion that the 
sale did not pass the property absolutely to the 
purchaser, and that the rights of the lessee who 



108 NATURE OF SIMPLE MORTGAGE. 

LECTURE claimed an interest in tbe property could not be 
prejudiced by a sale under a decree made in his 
absence. It would, bowever, seem, altbougb tbe point 
was not before tbe Court, tbat tbe purchaser, as 
assignee of tbe lien of tbe creditor, would have a 
right to insist upon tbe lessee's redeeming him, and on 
bis failure to do so, to sell tbe property, tbe purchaser 
being entitled to a charge on tbe purchase money to 
the extent of tbe lien of the creditor who first put 
up the property to sale ; and this would seem to be 
the only course open to him if the mortgage security 
was impaired by tbe creation of tbe term by tbe 
debtor. Under the law as it stood before the Full 
Bench ruling in Haran Chunder Ghose's case 
(23 W. R., 187), the sale by the mortgagee would 
have avoided tbe lease, and the right of the tenant 
would have been confined to tbe surplus proceeds 
of tbe sale. (Brcjo Kishoree Dassee v. Mahomed 
Solim, 10 W. R., 151. See also 7 W. R., 67 ; 10 
W. R., 291.) 

The security which is possessed by a mortgagee 
under a simple mortgage is, as I have endeavoured 
to explain, tbe right to sell the entire estate of the 
mortgagor as it existed at the date of the mortgage 
free of any charges on tbe property subsequently 
created by tbe debtor. Tbe Calcutta High Court bus 
not made any alteration in respect to the nature of 
tbe security to which the mortgagee becomes entitled 
under this form of mortgage, tbe rule laid down by 



PUtSNE ENCUMBRANCERS. JQQ 

the Court being a mere rule of procedure. The LKCTTURK 
mortgagee has still the right to sell the entire estate 
of the mortgagor as it existed at the date of the 
mortgage, but he must take care to bring the puisne 
encumbrancers before the Court. Under a decree for 
sale obtained in their absence, the mortgagee can 
only transfer to the purchaser the benefit of his own 
lien and such interest, if any, as may be possessed 
by the debtor at the time of the institution of the 
suit. 

As far as I have been able to discover, the rulin- 

' O 

of the Calcutta High Court has not been followed 
in the other provinces, and a purchaser under a 
decree for sale obtains a complete title to the pro- 
perty although such decree may have been made in 
the absence of the puisne encumbrancers. 

It is perhaps idle to expect that the case of Haran 
Chunder Ghose v. Denobund/ioo Bose will be reconsi- 
dered. It is, however, doubtful if the Court did not 
in that case go too far in their anxiety to protect the 
interests of posterior encumbrancers. It is true that 
no person ought to be affected by an order made in 
his absence. But how is the puisne encumbrancer 
affected by the conversion of the estate into money ? 
He may have a right to the surplus proceeds, and if 
that is secured to him, it is difficult to discover how 
he can be possibly prejudiced by a decree for sale. 
In every system of law in which the pledgee 
possesses the right of sale, what he sells is 



HO SALE BY MORTGAGE. 

LECTURE the property pledged to him, and not merely an 
- undefined interest in the pledge, and no claimants 
upon the property posterior to the first pledgee can 
interfere with this right. (See the observations of 
Markby, J., in Haran Chunder Ghose v. Denobun- 
dhoo Bose.} I do not deny that very different con- 
siderations would arise if the mortgagee asked not 
for a decree for sale, but one for foreclosure. A 
decree for foreclosure stands upon a very different 
footing from a decree for sale, and any argument 
founded upon analogy would be sure to mislead. 

There is besides another aspect of the question 
which I have not yet considered. It is very seldom, 
indeed, that an estate sold under an execution 
realizes an adequate price, and the encouragement 
offered to speculative purchasers is one of the prin- 
cipal sources of a good deal of litigation never very 
healthy, and frequently dishonest. It is not difficult 
to foresee that the result of the Full Bench rulhm; 

^ 

will be to aggravate the evil, and that both mort- 
gagee and mortgagor will suffer by the sale of 
rights which must be to a great extent uncertain. 
The mischief is carefully guarded against in other 
systems of law by provisions which, while they 
secure to the creditor his just rights, prevent a need- 
less sacrifice of the property of the debtor. Indeed, 
in this respect the interest of the debtor is identical 
with that of his creditor, as the object of both must 
be to secure the best possible price for the property. 



CONTINENTAL LAW. 

Under the law as it was understood before the LECTUBB 
Full Bench ruling to which I have had occasion to 
refer so frequently, this might be always accom- 
plished by a sale by the first pledgee, who it was 
thought could pass the property free of all subse- 
quent encumbrances. In the case of a puisne 
encumbrancer the result was, no doubt, different, as 
the sale by him was, as it still is, subject to all prior 
mortgages. It may, however, be suggested that even 
in this case it might perhaps be more convenient to 
allow the creditor to sell the estate, the preferential 
right of the prior mortgagee to the purchase money 
being secured to him. I am afraid that the sugges- 
tion may be regarded as somewhat wild, and I am free 
to confess that it is one which I should not have 
ventured to make if I had not found similar provi- 
sions in the law of France and other countries, 
whose jurisprudence is moulded on the Roman law. 
Broadly speaking (for I do uot pretend to give a 
detailed account) a sale under an execution extin- 
guishes all hypothecary rights or debts affecting 
the property, the right of the creditor being trans- 
ferred to the purchase money. For this purpose 
the proceeds of the sale are deposited in the Court, 
and the creditors of the mortgagor are cited to 
appear and assert their claims. A proceeding i.s 
then adopted by which the respective priorities of 
the creditor are ascertained, and the proceeds 
divided according to the result of the investigation. 



112 CONTINENTAL LAW. 

LECTURE This proceeding is called the prceferentia and con- 
currence of creditors. Its object is to comprise the 
adjudication and assertion of those claims which are 
prior or preferred, as well as those which are con- 
current. Each claim to be preferred or ranked 
concurrently is regularly brought to issue and 
debated, and the Court, by its sentence, declares the 
order in which the parties are to rank on the pro- 
ceeds. (Code de Proced. Civile, tit. 14; see also 
Burge's Foreign and Colonial Law, Vol. II., pp. 
592-3; Vol. Ill, pp. 229-30.) This is a very 
simple and intelligent rule. It secures to the 
debtor a fair price for his property, and thus, 
as I have already explained, effectually protects 
the interests of the creditor. Trafficking in doubt- 
ful claims, one of the least interesting phases 
of litigation, finds no encouragement in such a 
system, while the rights of the creditors are guarded 
with a jealousy not less scrupulous than that which 
we find in systems with which we are more familiar. 
I have ventured to detain you with this 
slight sketch of the continental system of execution, 
not because I think there is much likelihood of 
the introduction of the principle into our own 
law, but because I think the student ought to 
have some acquaintance with the leading features 
of a system of jurisprudence which obtains in :i 
large part of the civilized world. A too exclusive 
attention to any one system is likely to induce a 



SALE BY MORTGAGEE. U3 

habit of mind, which I am afraid is to he found in LECTURE 
other persons besides the worthy English convey- 
ancer, who thought that an attempt by the legislature 
to preserve contingent remainders without the inter- 
vention of trustees was about as absurd as an 
attempt to alter the laws of nature. Certain 
doctrines, true only in a limited sense, come to be 
regarded as fundamental principles of jurispru- 
dence, and acquire such a firm hold that even the 
most gifted minds become intolerant of criticism. 
We have not to go far to seek for illustrations. 

To return : As the law at present stands, the right 
which passes under a sale by a mortgagee is the 
entire interest which the mortgagor and mortgagee 

O o o O 

could jointly sell. Where the subsequent encum- 
brancers are parties, and the order for sale is made 
in their presence, the purchaser acquires a higher 
right which may be described as the entire interest 
which the mortgagee together with the puisne 
encumbrancers and the mortgagor could jointly 
convey. This is not distinctly stated in the judg- 
ment of the Court in flaran Chunder Ghose v. 
Dennbundhoo Bose (23 W. R., 186), but there can 
be very little doubt that this would be so. In the 
case, however, of the second mortgagee, the interest 
which the purchaser acquires must be necessarily 
subject to the prior charge, and the presence of the 
first mortgagee as a party would not, I apprehend, 
make anv difference. In this respect, as I have 






15 



1 ] j SALE BY PUISNE MORTGAGEE. 

Lwrrna already said, the Full Bench has made no change in 
the law as it was previously understood. It is only 
in the case of a sale by the first mortgagee that the 
rule laid down in the earlier cases has been qualified 
bv making the presence of the puisne encumbrancers 
essential to the passing of the estate absolutely to 
the purchaser. I have already explained that the 
doctrine has been extended to the case of a lessee, 
and there can be no doubt that it will be applied 
for the protection of all persons having an interest 
in the property, and not parties to the decree under 
which the property is sold. 

I have said that the Full Bench ruling in Haran 
Ch under Ghose v. Denobunhoo Bose has made no 
change as regards second mortgagees. The propo- 
sition, however, must be understood with the neces- 
sary qualification that the second mortgagee stands 
in the same relation to posterior mortgagees that 
the first iiif: does to him, and that he is, there- 

fore, under the same obligation towards them as the 

O 

first niortua-; i is towards him. Thus a purchaser 
under a sale by the second mortgagee, although he 
inuM. in any event purchase subject to the rights 
of the first mortgagee, acquires a very different 
ite accordingly as the posterior mortgagees are 
parties t<> the decree or not. If the order for sale is 
made in their presence, the purchaser acquires the 
Intel v as. against them, but if it be otlier- 
\ the unrcha>e is made subject to their right to 



DOCTRINE OF LIS PENDENS. 115 

redeem. I may also point out that although it 1ms . LECTURE 
been always held that a purchaser of the mort- - 
gagor's interest is a necessary party to a suit by 
the mortsras-ee to enforce his charge, tlie rule was 

~ O O ' 

never extended to persons possessing a more 
qualified interest in the estate. The rights of these 
persons were recognized, so far as I am aware, for 
the first time, in Haran Chunder Ghose v. Denobun- 
dhoo Bose (23 W. R., 186). 

I have said that a sale by the mortgagee conveys 
to the purchaser the entire interest which he and 
the mortgagor could jointly sell. I may, however, 
point out that this refers to the interest which they 
could jointly pass, not at the time when the property 
is sold, but at the time of the institution of the suit 
in which the decree under which the property is sold, 
is made. This is a necessary consequence of the 
doctrine Us pendens, which I shall have occasion 
to discuss in a subsequent lecture. I may also 
point out that the language of section 259 of the 
Civil Procedure Code is perhaps, in strictness, inap- 
plicable to a sale by a mortgagee which takes place 
under a decree for sale, and not as in an ordinary 
execution. The right, title, and interest of the 
judgment- debtor, of which the section speaks, must 
be understood in a somewhat wider sense than the 
right possessed by the debtor at the time of the sale. 
As I shall have occasion to explain presently, the 
provisions of the Procedure Code with respect to 



CLAUSE AGAINST ALIENATION. 

LBCTURK executions are far from being clear on the rights 

IV. 

of the mortgagee. 

In connection with this subject I may mention 
that a question may arise, hut which, so far as I am 
aware, has not been decided, as to the effect of a 
clause against alienation contained in a deed of 
mortgage. Such clauses are frequently found in 
Indian mortgages. I have already explained that 
ordinarily a clause against alienation does not 
prevent the alienee from acquiring a title to the 
property. The covenant does not affect the thing 
itself, although in some cases the covenantor may 
render himself liable to an action for a breach of 
his contract. It would, however, seem that in the 
Civil law a clause against alienation by the mort- 
gagor is allowed to bind the property itself, and a 
subsequent alienation is therefore void. In conse- 
quence of this doctrine the mortgagee is not bound 
to recognise any alienee of the property mortgaged 
to him, it there be a clause against alienation in the 
mortgage. It seems that in some of the earlier 
'S to be found in the books, the doctrine was 
carried by the Indian Courts further than equity or 
good conscience would seem to justify; but it may 
ion whether, in the presence of such a 
.stipulation, a decree obtained by the mortgagee, and 
a sale thereunder, although made in the absence of 
who acquired an interest in the property 
M -i| neatly to the mortgage, would not pass an 



SIMPLE MORTGAGE. 117 

absolute title to the purchaser. In the absence of LECTURE 

IV. 

any distinct authority I do not venture to offer any 
opinion one way or the other. I simply call attention 
tq the point as one which must not be taken to be 
concluded by the Full Bench ruling in Haran 
Chunder Ghose's case. (23 W. R., 186.) 

It was thought at one time that a creditor whose 
debt was secured by a mortgage, was bound to pro- 
ceed in the first instance against the property mort- 
gaged to him, and that he could only proceed against 
other properties for the deficiency, should there 
be any. (Brohmomoyee Debea v. Bykunt Chunder 
Gangoolly, 5 W. R., Mis., 52.) It is, however, now 
settled that a mortgagee is under no such liability, 
and that he is at liberty to proceed against any 
property belonging to his debtor in the same way as 
an unsecured creditor, and this right is not qualified, 
although the decree should say that execution should 
be first had against the property pledged to the 
creditor, and afterwards against the person. It is 
always competent to the creditor to say, " I am con- 
tent to rest upon the decree which [ have obtained 
for the money due upon the bond, and to waive 
the right which I have as mortgagee." (Fakeer 
Buksh v. Chutterdharee, 14 W. R., 209 ; see also 
Parmessaree Dossea v. Nobin Chunder Tavan, 24 
W. R., 305.) I need hardly point out that these 
observations do not apply to cases in which the 
creditor has lost his right either by the operation of 



ORDER FOR DISTRIBUTION. 

LCTC*E the statute of limitations, or otherwise to proceed 
upon the covenant contained iu the mortgage, and 
is restricted by the decree to proceedings against 
the land on which the debt is secured. 

I will now call your attention to section 271 of 
the Civil Procedure Code a section which I may 
venture to say is by no means a favorable specimen 
of legislative workmanship. The section says as 
follows: "If, after the claim of the person on 
whose application the property was attached has 
been satisfied in full from the proceeds of sale, any 
surplus remain, such surplus shall be distributed 
rateably amongst any other persons who, prior to 
the order for such distribution, may have taken out 
execution for decrees against the same defendant, 
and not obtained satisfaction thereof. Provided 
that, when any property is sold subject to a mort- 

,e, the mortgagee shall not be entitled to share 
in any .surplus arising from such sale." 

Now the first observation which I think it neces- 
sary to make upon this section is that its language 
clearly points to a case in which there is a surplus, and 
there arc rival judgment-creditors among whom it 

I to be distributed. It has no application where 
the mortgage is the only creditor who seeks to be 
paid out of the surplus proceeds as being money pay- 
able to his debtor in the hands of the Court. In other 
words, the judgment-debtor cannot object to the 
mo, 'i demand to be paid out of the surplus 




RIGHTS OF MORTGAGEE. H9 

purchase money. (24 W. R. 305.) The only LECTUBE 
ground upon which he could do that would be that 
the mortgagee was bound to satisfy his debt, as far 
as he could, in the first instance, by the sale of the 
property pledged to him. But as we have already 
seen, the mortgagee is not under any such liability, 
and the result of the recent authorities is that a 
mortgage creditor is not in a less favorable situation 
than an unsecured creditor in respect of the pro- 
ceedings allowed by the law for the purpose of 
enforcing a judgment for money. 

The next question which arises upon the section 
is whether in a contest between unsecured creditors 
and a mortgagee, where the money in the hands of 
the Court is not sufficient to pay all the creditors in 
full, the mortgagee can waive his rights as mort- 
gagee, and insist upon sharing in the surplus as an 
ordinary creditor. You will see that the consider- 
ations which arise here are very different from those 
which would arise if the contest was solely between 
the debtor and the creditor. The law seems to be 
anxious to guard against a wanton sacrifice of the 
rights of the unsecured creditors, and upon a prin- 
ciple which has its foundation in equity and good 
conscience a principle which I shall explain in a 
subsequent lecture the mortgagee is not permitted 
to share in the purchase money which is paid, 
not for the absolute interest in the estate, but only 
for the equity of redemption. The mortgagee has 



JOQ ORDER FOR DISTRIBUTION. 

in his mortgage ample security for the realization 
i v 
- of his dues, and his rights are in no way prejudiced 

by refusing to permit him to share in the surplus 
proceeds, while very great injustice might be done if 
a different course were followed. Thus, for instance, 
suppose an estate is worth Rs. 50,000, and that it 
is mortgaged for Rs. 25,000. If the estate is sold 
subject to the mortgage, it will sell only forRs. 25,000, 
being the value of the equity of redemption. 
The niortoao-ee is, therefore, sure to s;&t his monev 

o o o / 

out of the estate, but suppose he is permitted to 
share in the surplus proceeds, the result will be that 
the purchaser will be benefited, and the debtor and 
liis creditors will suffer to the extent to which the 
lie 11 is reduced. Thus, suppose the mortgagee gets 
Rs. 5,000 under an order for distribution. The 
fund available to the unsecured creditors will be 
by that amount, while the purchaser under the 
ration will get property worth Rs. 50,000 for 
only Rs. 45,000. It seems to me, therefore, not- 
withstanding certain expressions in the judgment of 
the Court in Fukeer Buksh v. Chutterdharee (14 
\\ . II., t>0!)), which might seem to support a con- 
trary new, that a mortgagee is not entitled to 
share in the surplus arising out of the sale of 
property which is sold subject to his mortgage, i.e., 

O O / 

have already explained, when the contest is 

ii him and the unsecured creditors of the 
debtor. If there should be any surplus after satis- 



RIGHTS OF MORTGAGEE. 121 

the claims of the unsecured creditors, the LECTURE 

IV. 

mortgagee may have a right to such surplus. 

I have said that the result of the recent authori- 
ties seems to place the mortgagee's right to proceed 
against any property belonging to his debtor 
beyond all doubt. It may, however, be doubted 
whether the doctrine does not require some quali- 
fication a qualification which is based upon the 
same principle which excludes the mortgagee from 
the benefit of an order for distribution under 
section 271 of the Procedure Code. I think there 
can be no doubt that the mortgagee has ordinarily 
the right to proceed against any property belonging 
to the judgment-debtor, but should not this right 
be restricted when the equity of redemption has 
passed away from the judgment-debtor to a third 
person. Thus, to take the illustration given in the 
last paragraph, the purchaser pays only Rs. 25,000 
for the property purchased by him, as it is sold 
subject to a mortgage for Rs. 25,000. Now if the 
mortgagee is permitted to proceed against other 
properties, without in the first instance proceeding 
against the property pledged to him, the purchaser 
may acquire an estate worth Rs. 50,000 for one-half 
the sum. It is probable that the judgment-debtor 
may not be wholly without a remedy, and he will 
be perhaps entitled to the benefit of the lien, and 
the equities between the parties may possibly be 

worked out in a regular suit between the purchaser 

16 



122 ORDER FOR DISTRIBUTION. 

ami the debtor. But I think this would be a perfect 



IV 

- waste of litigation, and the limitation which I have 

O ' 

ventured to suggest on the right of the mortgagee 
to proceed against his debtor ought to be accepted, 
if for no better reason, at least for the prevention of 
that circuity of action which the law is generally 
supposed to abhor. The legislature also would 
seem to have guarded against this very evil by 
refusing to permit the mortgagee to share in the 
surplus proceeds of property sold subject to his 
mortgage. for I conceive that even if there had been 

O O ' 

110 such provision, the unsecured creditors would 
have been permitted to stand in the place of the 
mort^a^ee to the extent to which the fund to which 

o o 

they were exclusively entitled to look for the satis- 
faction of their dues, was reduced by the action of 
tin- mortgagee; and this upon a doctrine which is 
by no means peculiar to any particular system of 
jurisprudence, but which has its foundation in the 
broadest principles of equity and good conscience. 
It may be said that it would be beyond the province 
of the Court to Impose limitations and restrictions 
on the rights of creditors which are not to be found 
iu the. Code of Civil Procedure, but the principle to 
which I refer is in no .sense whatever a part of the 
law of jiroceduiv, and its introduction would not, I 
apprehend. hi- ivirarded as in any way trenching 
upon the province of the l"-i-l;iture. (Mlrza Futteh 
"///. r, W. I! . Mis., l;; ; 1 Madras, -4!).) 



SALE " SUBJECT TO MORTGAGE." 123 

The question as to what is meant by "sold LECTURE 
subject to a mortgage " has given rise to consi- 
derable discussion. In a recent case, Fakeer Buksh 
v. Chutterdliaree Chowdhry, the Court observed: 
" We think that section 271, Act VIII of 1859, or 
rather the proviso in that section, is intended to 
apply to a case where the property is actually sold 
subject to a mortgage, and where the transaction 
is such that the purchaser is buying the property 
subject to the mortgage, where he is, in fact, only 
buying the equity of redemption which remains in 
the judgment-debtor ; and it does not apply to a 
case where there is merely the right by law in the 
mortgagee to enforce his mortgage against the 
purchaser. This appears to have been the view 
taken by this Court in a decision reported in 
6 Weekly Reporter, Miscellaneous Rulings, page 13. 

"There the Court says: 'It is not equitable that 
the purchaser who purchased and paid for only the 
mortgagor's interest in this property, should hold 
it released from Gregory's lien.' Now, here it 
does not appear that the sale to the purchaser was 
in fact subject to the mortgage. By ' in fact ' we 
mean that it was not so subject by the contract of 
sale, and there was merely a legal right existing 
which might be capable of being enforced. It 
seems that a petition which was presented by the 
present appellant was not taken notice of, and 
neither in the proclamation of sale, nor in any of 



124 SIMPLE MORTGAGE. 

LECTUBE tbe sale proceedings, is mention made of the exist- 
ence of any mortgage. Nor is there anything to 
show that only a limited right of the judgrnent- 
dehtor was to be sold. Therefore, upon that con- 
struction of section 271, we should say that the 
proviso does not apply to the present case." (14 
W. R., 209-10). 

According to this decision the mortgagee may 
share in the surplus proceeds, although the pur- 
chaser aware that the property was in law subject 
to a mortgage paid only the price of the equity of 
redemption, and not that of an absolute interest in 
the property. If the contest had been between 
parties who had induced an honest purchaser to 
lay out money in the bond fide belief that he was 
purchasing the property free of all encumbrances, 
such a construction might be supported on the 
ground that it tended to prevent a circuity of action, 
for the consequence of refusing the mortgagee to 
share in the distribution would be to throw him 
upon the. mortgaged property, with the further 
consequence that the purchaser would have a right 
the unsecured creditors to refund a portion 
the purchase money equal to the amount of the 
'" But the doctrine of a purchase in good 

faith for valuable- consideration without notice has 
not b.-i-n ever applied to a purchaser under an 
'ut ion, who purchases only the rights and 
lllt( ^ debtor, while its extension to every 



SALE BY MORTGAGEE. 125 

case in which no mention is made of the mortgage LECTURE 
at the time of the sale, would be wholly without - 
precedent. It seems to me, therefore, with very 
great deference, that the proposition laid down by 
the Court in Fakeer Buksh v. Chutterdharee Chow- 
dhry (14W. R., 209), cannot be supported to its 
full extent, as the only foundation upon which it 
could be placed, the prevention of a multiplicity 
of suits, fails. I say the only foundation, because 
I think that it is quite clear from what I have said 
that the doctrine would be open to the same objec- 
tion as permitting the mortgagee to share when 
the property is sold expressly subject to a mortgage. 
I have already said that a sale by an unsecured 
creditor passes only the equity of redemption. 
There may, however, be cases in which the pur- 
chaser acquires a higher right. Thus, for instance, 
in the case of Mudhusudun Sing v. Mukundloll Sahee 
(23 W. R., 373), where execution was taken out 
by one of the creditors against an estate which 
was subject to a mortgage in favor of another cre- 
ditor, who also had placed an attachment on the 
property, and the property was subsequently sold 
at the instance of the first creditor, but without any 
mention of the mortgage it was held by the Court 
that what passed to the purchaser under the sale 
was not the bare equity of redemption, but the 
property itself, free of the mortgage held by the 
other creditor ; and the case of Nadir Hussen 



126 ATTACHMENT. 



i.i,in:i v. llilmn P> nrno (J!) W. R., 255) lays down still 

IV 

- more broadly that when an estate is sold pending 
an attachment by the mortgagee, the lien is 
transferred from the property to the purchase 
money, and the purchaser acquires the pro- 
perty discharged from the lien. The rule laid 
down in these cases is likely to prevent, in some 
measure, the evils which attend all sales in exe- 
cution in this country ; it being by no means an 
uncommon thing for the same property to be sold 
successively five or six times, first by an unse- 
cured creditor, and then by the mortgage creditors 
of the debtor; the third mortgagee probably com- 
ing in first, then the second mortgagee, the first 
mortgagee closing the scene; and this although 
cution had been taken out and the property 
attached by all the creditors, when the sale took 
place at the instance of an unsecured creditor. 

I shall now refer to another section of the 
Procedure Code which also has created no little 
difficulty. I allude to section 270 of the Code. 
That section says : " Whenever property is sold 
in execution of a decree, the person on whose 
application such property was attached shall be 
entitled to be first paid out of the proceeds thereof, 
notwithstanding a subsequent attachment of the 
same property by another party in execution of a 
prior deer- Now this section in terms gives to 

the creditor by whom the property is first attached, 



RIGHTS OF MOETGAGEE. 127 

i.e., first made available to the creditors of the LECTURE 

IV 

debtor, the right to be paid first. But suppose the 
property is sold by a mortgagee who comes in 
after the property has been attached, but whose 
mortgage is prior to the attachment. It cannot 
be said that his claims should be postponed to that 
of the unsecured creditor, and yet the language of 
the section would seem to leave no discretion to the 
Court of execution in the matter. It is unnecessary 
to discuss if this is the right view, for, as explained 
by the Court in a recent case (22 W. R., 98), 
the enactment was never intended to alter or limit 
the rights which a person may have acquired by 
contract independently of the rules embodied in 
the Code of Civil Procedure. As the law, therefore, 
at present stands, the Court of execution is fre- 
quently obliged to make an order which the Court 
knows, and which the parties perhaps know equally 
well, will be set aside in what is called a regular 
suit. I speak with reserve, but it seems to me 
that the whole chapter on execution in the Civil 
Procedure Code relates to sales in execution of 
decrees for money, and not to sales under decrees 
for that purpose obtained by mortgagees. The 
provisions relating to attachments and the language 
of section 259 of the Code leave on my mind a 
very distinct impression that the legislature had 
before them only one class of sales, those in execu- 
tion of decrees for money. 



PURCHASE FOR VALUE. 

,. BE I will end with a few general observations on the 
security to which the mortgagee becomes entitled 
under an ordinary simple mortgage. Now it is 
ncc( -ss.-iry to bear in mind that a simple mortgage 
c -rentes a real right, and that the defence of purchase 
for value without notice is not applicable to a suit 
by a mortgagee to enforce his security. I have 
already explained the origin of this doctrine 
introduced by the English Court of Chancery for 
the purpose, among others, of guarding against the 
consequences of treating a contract as a conveyance. 
It is, therefore, that, as a general rule, the defence is 
not allowed when the right sought to be enforced 
is :i legal right, and not one which is recognised 
onlv by equity. It would be beyond the province of 
these lectures to explain the doctrine at length, and 
it I recur to it, it is only because its somewhat indis- 
criminate application in this country has attracted 
to it a cloud of prejudice, much of which, when kept 
within reasonable limits, the doctrine certainly does 
not deserve. The real truth seems to be that the 
doctrine is in some measure a 'survival,' and points 
to times when a conveyance was a transaction 
which never could take place secretly, while a mere 
.(incut was not attended with any such publicity. 
Jn these days, when the title to real property passes 
by mere writing, a conveyance may be attended 
with as little publicity as an agreement to transfer 
B i'u turf time, and it is this feeling apparently 



EIGHTS OF MORTGAGEE. 129 

which has led to the extension of this doctrine LECTUEE 

iv. 
to real rights. In all enlightened systems of 

jurisprudence, however, the somewhat cumbrous 
formalities which our forefathers insisted upon as 
a protection against fraudulent practices, are gra- 
dually giving way to a system of Registration of 
Assurances. 

The question whether a security is available 
against a purchaser from the mortgagor without 
notice of it, was raised in the Calcutta High Court 
in the case of Maharajah Moheshur Bux Singh 
Bahadoor v. Bhikha Chowdhry, and was answered in 
the affirmative. Sir Barnes Peacock, in giving the 
judgment of the Full Bench, observed: "As to the 
second ground which has been raised for our opinion, 
namely, that the purchaser under the bill of sale 
was a bond fide purchaser without notice, and there- 
fore entitled to priority, if the bond was really 
and bond fide executed before the date of the defend- 
ant's purchase, it would primd facie be entitled to 
priority, and the defendant could not, according to 
the decision in the case of Verden Seth Sam v. 
Luckpathy Royjee Lallah (Marshall's Reports, 
p. 461), succeed without proof that he was a bond 
jide purchaser for value without notice. But even 
if the defendant were to satisfy the Court upon that 
point, he would not, in my opinion, be entitled to 
priority, unless the plaintiff was bound to give 

notice of his bond. If he was not bound to register 

17 



130 PURCHASE FOR VALUE. 

IUK it in order to retain priority over subsequent pur- 

IV 

- chasers for value, I do not see what notice lie could 
give, or was bound to give. The mere charge upon 
an estate does not give a right to the possession of 
title-deeds; and even if it would, the plaintiff in 
the present case had a charge, not upon the entire 
estate, but only on one or two villages, which 
would not give him a right to the possession of the 
title-deeds to the whole estate. 

" But if the defendant should prove that he was 
a bond fide purchaser for value, he would throw the 
onus on the plaintiff of proving that he actually 
advanced the money as alleged in the bond creating 
the charge, and that the bond was executed before 
the defendant's purchase." (5 W. E,, 63. See 
also 4 Madras, 434; 5 Madras, 457.) 

Mr. Justice Campbell, who was of a different 
opinion, pointed to the " frightful consequences 
which may result if it be established as law that a 
lien on real property without either publication or 
ion will suffice to defeat the most cautious 
purch:iMT." "I should fear," adds the learned 
.Indue, "that in this country the result would be 
an entire insecurity of title; that it would be 
impossible for any man by any amount of caution to 
buy real property with any confidence or any secu- 
r ". v th;i : lion-holders may not startup with 

documents (or possibly even asserting verbal engage- 
ment.-) proved, as proof here goes, and which he 



STATUTE OF LIMITATIONS. 131 

cannot disprove, and may defeat or harass him." LECTUKE 
(5 W. R., 67.) 

It is impossible to deny that there is a good deal 
of truth in these observations. In countries where 
the Roman doctrine of hypothecation obtains, the 
evil is guarded against by the device of public 
hypothec books, and the same purpose is served by 
the new system of registration which has been 
introduced into this country since the passing of the 
16th Act of 1864. 

The fact that hypothecation confers a real right 
seems also to have been overlooked in some of the 
earlier cases on the Statute of Limitations, in which 
it was held that a mortgagee was bound to enforce 
his security within the time limited to suits for 
breaches of contracts. (Seetul Sing/i v. Baboo 
Sooraj Bux, 6 W. R., 318, since overruled. See 
Sarwar Hossein v. Shazada, Golam Mohamed, 
9 W. R., 170.) In the last case it was held that 
a suit to enforce a security is a suit to recover 
an interest in immoveable property within the mean- 
ins; of clause 12 of the first section of Act XIV of 

O 

1859. It must not, however, be understood that the 
same extended period was allowed to the mortgagee 
to sue on the covenant which must be enforced 
within the same period as any other contract. (10 
W. R , 379 ; 10 W. R., 56.) The new Limitation Act 
has, by Art. 132, Schedule II, expressly provided 
for suits " for money charged upon immoveable 



DECREE FOR SALE. 

property," find the period of limitation is stated to be 
twelve years from the time when the money becomes 
due. It would seem, although the language is not 
verv precise, that, as under the old law, the remedy 
on the covenant must still be sought within the 
period limited for contracts. 

It follows from what I have said as to the nature 
of the right created by a simple mortgage, that a 
suit to enforce the security must, like any other suit 
for hind, be brought in the Court within whose juris- 
diction the land is situated, although the remedy 
against the person may have to be sought in a 
different forum. There is indeed a case at 9 Bombay, 
page 12, in which a different view is taken, but I 
presume it cannot be supported. (See 18 W. R., 
269; 18 W. R., 287.) As the law was understood 
before the Full Bench ruling in Haran Cliunder 
Ghose's case (23 W. R., 187), it was of the utmost 
importance to the plaintiff to bring his suit in the 
proper Court, as no other Court than that within 
whose jurisdiction the land was situated, could make 
a decree expressly directing a sale of the mortgaged 
property ; ami this declaration was always sought by 
the mortgagee, although the mortgagor had not in 
any way parted with his interest in the property 
either by a sale or a second mortgage. It is true 
that, under a recent ruling of the Calcutta High 
Court, a mere money decree is, as between the parties, 
id as a decree for sale, but the mortgagee 



DECREE FOR SALE. 133 

would certainly act safely in expressly asking for LECTURE 

the usual decree for sale, which, as I have already - 
explained, can only be made by the Court within 
whose local limits the land is situated. 



LECTURE T. 



Conditional sales Differences in form between conditional sales and 
English mortgages Difference between mortgages by conditional 
sale and sales with clause for repurchase Mortgagor does not 
generally incur any personal liability Construction of the Sudder 
Dewany Adalut True meaning of "construction" Implied war- 
ranty of title by mortgagor- -Remedy for breach of warranty 
Remedy of mortgagee when pledge is accidentally destroyed Princi- 
ple on which damages should be assessed Right of mortgagee to 
prevent waste when security is insufficient Reg. XVII of 1S06 
Process of foreclosure in Bengal Meaning of " stipulated period," 
" legal representatives" Duty of Court on receiving application Pro- 
vinous of Regulation mandatory and not merely directory Distinc- 
tion between mandatory and directory enactments Proceedings 
under Regulation merely ministerial Regular suit Process of fore- 
closure elsewhere than in Bengal Moulded on the practice of the 
English Court of Chancery Right of mortgagee to possession 
immediately on default How far qualified in Bengal by Regulation 
XVII of 1806 Limitation Acts XIV of 1859 and IX of 1871. 

A MORTGAGE by conditional sale is, as its name 
denotes, a conditional conveyance of land as a 
security for the repayment of a loan "with a stipu- 
lation that, if the money borrowed be not repaid 
with or without interest by a certain day, the sale 
shall become absolute." It resembles very closely 
in form an Kn^lish mortgage, both of them belong- 
in u r to that class of securities in which the property 
1'1<-: liable to pass from the debtor to the 

litor on default. There is, however, some 



MORTGAGE BY CONDITIONAL SALE. 135 

difference in the form of the instruments. In an LECTURE 

v. 
English mortgage the ownership is wholly trans- 

ferred to the creditor, liable, however, to be divested 
by the repayment of the loan on the appointed day. 
The English mortgagor says to his creditor, " I sell 
my property to you, but if I repay the debt by a 
certain day, the conveyance shall be void or (as is 
now more usually the case) you shall reconvey the 
property to me." In the Indian mortgage, on the 
other hand, the creditor acquires only a qualified 
ownership, which, however, by the terms of the agree- 
ment ripens into absolute proprietorship immediately 
on default. In the English mortgage, therefore, 
the mortgagee, by the terms of the agreement, has 
the right to enter upon possession of the property 
mortgaged to him immediately upon the execution 
of the deed, but the mortgagee under a conditional 
sale can have no such right. The possession of the 
mortgagor is, therefore, generally protected in an 
English mortgage by a covenant for quiet posses- 
sion till default, a covenant which would be wholly 
superfluous in an Indian mortgage, for the simple 
reason that with us only a qualified ownership 
passes to the mortgagee, which before default does 
not carry with it the right to the possession of the 
property. 

A practice, however, obtains in this country, which 
also seems to have prevailed in England in former 
times, by which the debtor executes a deed purport- 



136 SALE WITH CLAUSE FOR REPURCHASE. 

LECTURE ins; on the face of it to be an absolute conveyance, 

y 

the creditor, on the other hand, engaging to recon- 
vey the property to the debtor on repayment of 
the loan. In such cases the conditional sale differs 
but very little in form from an English mortgage. 
The practice, however, is open to very serious objec- 
tion, and is gradually dying out. 

In the case of Rajah Heera Singh (N. W. P., 
Vol. VIII, p. 564), where there was an absolute sale 
together with an agreement by the purchaser to 
reconvey the property, if the purchase money, toge- 
ther with interest, were paid by a certain day, it was 
contended that the transaction between the parties 
was not a mortgage, but only " a redeemable sale," 
and, therefore, not subject to the rules relating to 
mortgages. The Court, however, held that a 
redeemable sale was identical with a mortgage, and 
that the vendor in a redeemable sale had an equity 
of redemption which must be foreclosed in the 
same way as in an ordinary mortgage. (See also 
Annnn Pandt'i/ v. Norrotun Koonwar, 3 Sel. Rep. 
78.) 

There can be no doubt that the case was rightly 
(Irri.K-d, but the proposition about "redeemable 
Bales" is stated in terms which are somewhat 
broad. It is true that the rights of 
ni" r may not be defeated under color of 

a iv.lrrmabh; sale, but care must be taken to dis- 
a inoi-imi-c from a bond fide sale with a 



SALE WITH CLAUSE FOR REPURCHASE. 137 

clause for repurchase. The two things resemble LECTURE 
one another closely in form, but differ widely in 
their incidents. If there is a bond Jide sale with a 
condition for repurchase, the power must be exer- 
cised strictly in compliance with the terms of the 
condition, while in the case of the mortgagor, a 
failure to fulfil the strict terms of the agreement 

O 

is not immediately followed by a forfeiture of the 
property. The reason of this difference is, that in 
the case of a bond fide sale with an option to the 
vendor to repurchase within a given time, there is 
no equity whatever to relieve against the sale, the 
rights of the purchaser being entitled to protection 
equally with those of the vendor; while in the case 
of a mortgage the transaction is regarded only as a 
security, and the mortgagee is sufficiently compen- 
sated by receiving interest in default of payment 
at the appointed time. The distinction is illus- 
trated in several English cases, in which Courts of 
Equity, notwithstanding the jealousy with which 
such transactions are viewed, have refused to 
relieve the vendor from the consequences of his own 
default, and has been acted upon by our own Courts 
in more than one reported case. (Rajah Lakshmi 
Chelliah Garu v. Rajah Sri Krishna, 7 Mad., 6; 
Venkappa Chetti v. Akku, 7 Mad., 219.) 

It is not perhaps always very easy to determine 
the class to which a particular transaction belongs. 

The question always is, was the transaction a bond 

18 



138 DISTINCTION BETWEEN A MORTGAGE 

cm fide sale with a contract for repurchase, or was it a 
under the form of a sale ? In this, as in 



every other case, the intention of the parties must 
be looked to, and that intention may be shown by 
the deed itself, by other instruments, or even by oral 
evidence. (Alderson v. White, 2 De and J., 97; 
see also Nallana Gaundan vs. Palani Gaundan, 
2 Mad., 422. ) The test sometimes applied by 
English Judges, viz., the existence or absence of a 
power to recover the sum named as tlie price for 
the repurchase, cannot safely be applied in this 
country, because, as you will presently see, there is 
in general no personal liability incurred by the 
debtor in a mortgage by conditional sale. There 
are, however, other circumstances which may fur- 
nish a key to the real character of the transaction. 
If, for instance, the conveyance is not followed by 
possession, or if there is any covenant for the pay- 
ment of interest, I presume the transaction will be 
regarded as a mortgage, while, if the purchaser is 
let into possession as owner with no power to 
recover interest upon the purchase money paid by 
him, tin: instrument will be regarded as an absolute 
ith :m option to the vendor to repurchase. 
It i<. no doubt, possible to suggest a case in which 
the creditor might agree to take the rents and pro- 
in lieu of interest, and conceal the real nature 
lion under the appearance of a sale 
isc for repurchase, but even in this case 



AND A SALE WITH CLAUSE FOR REPURCHASE. 139 

the adequacy or inadequacy of sum mentioned in LECTUBE 
the instrument as the purchase money would per- - 
haps throw some light on the transaction. " The 
intention of the parties, as collected from the tenor 
of the deed, shows whether the bye-bil-wafa be a 
sale with the reserve of an option of retractation 
within a limited time, or a mortgage for the security 
of money lent. A stipulation for a short period must 
be considered to mark that a sale was in the con- 
templation of the parties ; a long term denotes a 
mortgage, or security for a loan, and such mort- 
gages, in the form of conditional sales, are very 
common." (Note I, Select Reports, p. 77 ; compare 
7 Mad., 6, and 7 Mad., 219, with 2 Mad., 422.) I 
shall close the subject with the remark that in 
doubtful cases the Court will lean strongly to the 
construction most favorable to the person claiming 
the right to redeem. 

There is a kind of mortgage much in use in the 
provinces of Bombay and Madras to which I have 
already had occasion to allude. The Dristibund- 
huk is in its nature essentiallv the same with our 

*/ 

own conditional sale, the debtor agreeing with his 
creditor to put him in possession on default of the 
property pledged to him as absolute owner. The 
Gahen Lahen of Bombay is also analogous to our 
conditional sale, and I propose to treat of all of 
these varieties of mortgages in the present lecture 
as they belong to the same group of securities in 



PERSONAL LIABILITY OF MORTGAGOR. 

LECTI-BE which the ownership of the pledge is liable to be 
1 transferred from the debtor to his creditor. 

I intend, in the first place, to call your attention 
to the rights acquired by the mortgagee under a con- 
ditional sale, although the mutual rights and duties 
of mortgagor and mortgagee are so interwoven with 
one another that I cannot discuss the rights of the 
mortgagee without in some measure touching upon 
those of the mortgagor. 

Now the first observation which I think it neces- 
sary to make is, that in a conditional sale the mort- 
gagor does not ordinarily incur any personal liabi- 
lity. The creditor can only look to the land 
pledged to him for the satisfaction of his debt. 
If the debtor make default, he may foreclose the 
equity of redemption and become the absolute 
owner of the estate. If the property is worth less 
than the amount due to him, he must suffer the loss, 
and cannot enforce payment from the debtor. 
This was laid down in a very early " construction " 
by the Sudder Dewany Adalut of Calcutta, and this 
\i-\v of the law has not, so far as I am aware, been 
since questioned. The "construction" says " If 
the IIK.I tLia.uc be of the nature of a conditional sale 
.-ind the money be not repaid, the lender, unless 
good and sufficient cause be shown, can only sue for 
lesaioo of the property pledged, and lias not the 
elcrtiou ,,f siiin-- for the money or to be put in 
of the property as he may deem most 



DEFINITION OF CONDITIONAL SALE. 141 

advantageous to his own interest." (Vide Select LECTURE 
Reports, Vol. VII, p. 92.) 

The language is not perhaps very precise, and it 
would seem that the proposition that the mortgagee 
must ordinarily look to the land is somewhat broadly 
laid down. The question, I presume, must depend 
upon the particular language of the instrument, 
and all that can be affirmed as a proposition of law 
is, that personal liability shall not be presumed in the 
absence of an express covenant. Thus qualified, the 
proposition would not seem to be open to any rea- 
sonable objection. Possibly this was all that was 
meant to be laid down in the construction, although 
the language used might have been more precise. 
I have in my own experience found very distinct 
covenants for repayment in Bengali mortgages, 
and it would not, I conceive, be just to say to the 
mortgagees in such cases, " You must not sue 
upon the covenant, but must proceed to foreclose 
the equity of redemption." 

I find that Mr. Justice Macpherson in his treatise 
on Mortgages defines a conditional sale as a mort- 
gage, in which " the borrower, not making himself 
personally liable for repayment of the loan, cove- 
nants that, on default of payment of principal and 
interest on a certain date, the land pledged shall 
pass to the mortgagee." (Macpherson's Mortgage, 
p. 11.) This definition, or rather description, of 
a conditional sale, is taken from the judgment of the 



242 WARRANTY OF TITLE. 

LECTURE Court in a very early case in the Sudder Dewany 
JL Adalut. But the learned author does not express 
any opinion of his own. 

In making the foregoing observations, I must not 
be understood as expressing an opinion that the 
mortgagee will be permitted in this country to pur- 
sue all his remedies concurrently, or that he may not 
be put to his election. The case of Mohanund 
Chattel -jee v. Govind Nath Roy (7 Sel. Rep., 110) 
is a direct authority that a mortgagee having elected 
to foreclose will not be suffered to sue the mortgagor 
personally for the debt secured by the mortgage. 

The question whether or not there is an implied 
warranty of title in a mortgage by conditional sale, 
is perhaps not wholly free from doubt. In the case 
of an out-and-out sale of immoveable property, 
there are conflicting dicta, if not decisions, and I 
presume the same uncertainty must extend to 
the case of a mortgage. The weight of authority, 
however, so far as mortgages are concerned, seems 
to be in favor of the existence of an implied 
warranty. (Dwnrka Dass against Rutton Si/i^/i, 
- Agra, 119.) The question, however, is not of much 
practical importance, as there are few mortgages 
in which some expressions may not be found 
ufficient to constitute an express warranty of title. 
'1 iie question next arises what is the remedy of 
the mort-agee if the title of the morto-a^or is found 

** **-' O O 

to be bad. This is pointed out by Mr. Justice 



REMEDY OF MORTGAGEE. 143 

Markby in delivering the judgment of the Court in LECTURE 
Syud Sayet All v. Syud Mohamed Jowad AIL - 
In that case the title of the mortgagor having proved 
defective, the mortgagee brought a suit, in which, 
after stating the result of a certain action between 
the mortgagor and a third person, in which such 
third person was declared to be the owner of the pro- 
perty which had been mortgaged to the plaintiff, the 
plaint proceeded to state " Hence, the right of 
Sayet Ali ceased to exist, and he held no longer any 
lien on the property sold. That for this reason 
your petitioner has become entitled to recover the 
consideration money with interest accrued thereon." 
(7 W. R., 197.) 

The plaint was filed on the 20th February 1864, 
before the time fixed for the repayment of the loan 
had expired. The defendant in his answer insisted 
that the suit was premature, as it was substantially 
a suit for the money which had been advanced, and 
which had not become due when the plaint was filed. 
Mr. Justice Markby, in overruling the objection, 
points out the real nature of the suit. The learned 
Judge observes, " With regard to the defence that 
the action is premature, because the time for 
repayment of the loan has not elapsed, we think that 
it is not well founded. The defendant has misunder- 
stood the cause of action ; it is not brought to 
enforce repayment of the loan, but it is an action for 
damages for breach of contract. A warranty of 




] 1 }. DESTRUCTION OF PLEDGE. 

LECTURE title amounts to a contract by the seller that, in 
consideration of the buyer purchasing the property 
and pay the consideration money, he (the seller) 
will make good to the buyer any loss which the 
buyer may incur by reason of the seller not having 
a uood title to the property. This is an absolute con- 
tract from the moment it has been entered into, and 
the buyer can sue upon it at once, if he can show 
that the seller has not a good title in accordance 
with his undertaking, and that he has sustained loss 
in consequence." (7 W. R., 196.) Further on the 
learned Judge observes, " It is perhaps desirable to 
point out that though, as above stated, the buyer 
may at once bring an action on a warranty of title, 
if he can show a breach of that warranty, it does not 
follow, as a matter of course, that he is entitled to 
recover back as damages the whole of the considera- 
tion money. Nor do we assent to an argument which 
has been put forward on the part of the plaintiff, 
and has received some countenance from the Princi- 
pal Suddcr Aineen, that, on its being ascertained that 
tin- seller had no title, the conditional sale was (to 
use the expression of the judgment below) nult(fied" 
(1 \Y. i;., I!.H;.) We thus find that the mortgagee 
ha- a right to bring an action for damages if the title 
of the mortgagor is found to be bad. The remedy 
of the mortgagee, is not quite so clear when the pledge 
i> ( 1 by what is called an act of God, or suffers 

deterioration so as to become insufficient for the 



ASSESSMENT OF DAMAGES. 145 

security of the creditor. I have not been able to LECTURE 

v. 
find any reported case on the subject, although I find 

it difficult to persuade myself that the precise point 
never came before any of the superior Courts in 
this country. We have already seen that the Hindu 
law in such cases permitted the creditor either 
to demand another pledge or to sue the debtor 
immediately for the debt secured by the pledge. A 
similar right is given by the French Code Napo- 
leon, and I may, therefore, venture to affirm that the 
principle will be adopted by our own Courts as 
founded in justice and equity, and open to no reason- 
able objection. 

While upon the subject I may venture to suggest 
that a similar rule may perhaps be applied with 
advantage to cases in which the mortgagor's title is 
found to be bad. It is perfectly true that the credi- 
tor would be sufficiently protected by permitting him 
to sue for damages for the breach of the warranty, 
but I think there would be very great difficulty 
in assessing the damages. As pointed out by the 
Court in Sayet AH v. Mohamed Jowad All (7 
W. R., 19o), it does not follow that the mort- 
gagee is entitled to recover as damages the whole 
of the "consideration money." For the purpose 
of this enquiry, I shall assume, as the Court 
apparently did in the case to which I have referred, 
that this would be one of those cases in which the 

mortgagor would be personally liable; for otherwise 

19 




] },; ASSESSMENT OF DAMAGES. 

run there can be no doubt that the mortgagee would 
be at least entitled to recover as damages the 
whole of the money lent by him. The question 
then arises what, assuming that the mortgagor is 
liable to be sued upon his covenant, is to be 
the measure of damages for the breach of the 
warranty. Now the principle on which the 
damages ought to be assessed would seem to 
depend upon the difference to the creditor in the risk 
incurred by him under the altered circumstances, 
and this difference ought to be the measure of the 
damage suffered by the creditor. Now the differ- 
ence in the risk is, I apprehend, capable of a money 
valuation in this way. What would be the rate of 
interest which the creditor would demand if the 
money were advanced on the personal security of 
the debtor? and the difference between this hypothe- 
tical rate and the rate at which the money was 
actually lent, would represent the loss to the creditor, 
not indeed with mathematical certainty, but with that 
substantial accuracy which is alone attainable in such 
'S. It is, however, evident that the principle can- 
not be worked out satisfactorily in practice. It 
would impose upon the Courts of Justice a duty 
which it would be next to impossible for them to 
perform. There can therefore be no serious objec- 
ii to the extrusion of the rule that where by reason 
;ii accident the mortgagee loses the benefit of the 
security, the mortgagor is bound either to repay the 



RIGHT OF MORTGAGEE TO PREVENT WASTE. 147 

debt, or to give another pledge. The debtor surely LECTURE 
cannot complain with reason of being obliged to 
repay, before the appointed time, money which would 
perhaps have been never lent to him but for his 
offer of a security which turns out to be worthless ; 
while the creditor will be only too glad to call 
in his money. In the case of an out-and-out sale 
the difficulties which I have suggested do not occur, 
but I think it would be unsafe to apply the same 
rule to a transaction which is essentially different, 
and which must, therefore, be governed by other 
rules. 

In the foregoing observations, I have confined 
myself to the rights acquired by the mortgagee 
immediately on the execution of the mortgage, and 
before any default has been committed by the mort- 
gagor. In connection with this subject I may mention 
that, although the mortgagor is treated as the owner 
of the land before foreclosure, the mortgagee has 
the right, where the security is insufficient, to ask 
the Court to interfere to prevent waste by the mort- 
gagor. I have not indeed been able to find any 
Indian case directly bearing upon the point, but the 
rule is founded in good sense, and there can be 
no possible objection to its application in this 
country. 

I shall now proceed to discuss the rights of the 
mortgagee after default made by the mortgagor to 
repay the debt by the appointed time. If we were 



EQUITY OF REDEMPTION. 

LECTUBE to look only to the terms of the contract between 
'- the debtor and his creditor, the ownership passes 
absolutely to the creditor immediately on default, 
and this would seem to have been actually the case 
in this country before the legislature interfered and 
engrafted on, what I may call, the common law of 
India, the rule borrowed from the practice of the 
Knglish Court of Chancery, by which the mortgagee 
is permitted to redeem within a reasonable time 
after he has forfeited his rio;ht to do so bv the 

o / 

terms of his own agreement. The preamble of 
Regulation XVII of 1806, which was passed for 
the Presidency of Bengal, points out the neces- 
sity of " an equitable provision " for allowing a 
redemption within a reasonable and limited period, 
as the only means of guarding against impro- 
vident and injurious transfers of landed property 
by the forfeiture of mortgages accompanied with a 
condition of sale. In the other provinces the legis- 
lature does not seem to have thought it necessary 
to interfere, but the same result has been accom- 
plished by what is called, not perhaps very felici- 
tously, judicial legislation. 

I propose in the first place to call your atten- 
tion to the provisions of the Bengal Regulation, by 
which the m \\as prevented for the first 

time from insisting upon a strict enforcement of the 
of his contract with the mortgagor. The 
HUl in order that he may become the 



BENGAL CODE. 149 

absolute owner of the property pledo-ed to him, LECTURE 
must proceed to foreclose the right of redemption, 
and the procedure which he has to adopt is pointed 
out by the 8th section of the Regulation, which 
says: "Whenever the receiver or holder of a 

/ 

deed of mortgage and conditional sale, such as is 
described in the preamble and preceding sections 
of this Regulation, may be desirous of foreclosing 
the mortgage, and rendering the sale conclusive on 
the expiration of the stipulated period, or at any 
time subsequent before the sum lent is repaid, he 
shall (after demanding payment from the borrower 
or his representative) apply for that purpose by a 
written petition, to be presented by himself or by 
one of the authorized vakils of the Court to the 
Judge of the zillah or city in which the mortgaged 
land or other property may be situated. The 
Judge, on receiving such written application, shall 
cause the mortgagor or his legal representative to 
be furnished, as soon as possible, with a copy of it, 
and shall at the same time notify to him by a 
purwana under his seal and official signature, that, 
if he shall not redeem the property mortgaged in 
the manner provided for by the foregoing section 
within one year from the date of the notification, 
the mortgage will be finally foreclosed, and the 
conditional sale will become conclusive." 

The preceding section declares the mortgagor 
entitled to redeem on payment of the principal 



150 "STIPULATED PERIOD." 

LECTURE sum with the interest due thereon. Now the 

y 

language of this section has given rise to a good 
deal of discussion, and I cannot do better than call 
your attention to some of the questions which have 
arisen upon it from time to time. In the case of 
Shoros/iee Bala Dabee and others v. Nund Lall 
Sein (13 W. R., 364; S. C.. 5 B. L. R., 389) 
the question arose as to the meaning of the words 
"stipulated period" which occur in the eighth 
section of the Regulation. The facts in that case 
were shortly these. On the 4th of September 1863, 
Shoroshee Bala Dabee and her son Hemendro Nath 
Mookerjee executed a mortgage of certain landed 
property at Chittagong to one Gobiud Chunder 
Sein. The deed was in the English form, and by 
it the property was conveyed to Gobind Chunder 
absolutely, subject to the proviso that in the event 
of the mortgagors paying Gobind Chunder the prin- 
cipal sum ofRs. 54,437-10-4 on the 4th Septem- 
ber 1868, and in the meantime paying interest on 
that sum at 10 per cent, per annum half-yearly, 
(i.e., on the 4th March and 4th September), with 
annual rests in the case of default of such payment, 
then and in such case Gobind would reconvey. 

The mortgagors failed to pay all the interest 
\vhick became due under the terms of the mort- 
gage, and on the 4th December 1866, Gobind 
Chunder applied by written petition to the Judge of 
Chittagong for a foreclosure of the mortgage pur- 



" STIPULATED PERIOD." 151 

suant to the provisions in that behalf of section 8 LECTURE 
of Regulation XVII of 1806. Thereupon, the pres- 
cribed notification seems to have been made to the 
mortgagors by the Judge. 

Upon the footing of this petition and notification, 
Nund Lall Sein, the son of Gobind Chunder, on 
the 15th April 1868 (his father having meanwhile 
died), instituted a suit for the establishment and 
confirmation of absolute purchase and to obtain 
possession of the mortgaged property accordingly. 

It is obvious from this statement of the facts of 
the case that the application to foreclose, as well 
the suit based upon it, were instituted before the 
period fixed for the repayment of the loan secured 
by the mortgage had elapsed. It was contended 
for the plaintiff that the suit was not premature, as, 
according to the terms of the deed, the defendants 
had lost their right to ask for a reconveyance; 
and the Regulation was never intended to give a 
right to the mortgagor other than a right to 
redeem within a certain time, even after he has lost 
all right to the property under the strict terms of 
the contract, and that the stipulated time within the 
meaning of the Regulation had therefore arrived 
as soon as there was a breach by the debtor. The 
contention, however, was overruled, and the Court 
in giving judgment observed : " If the Zillah Court 
was at liberty, and had the machinery to deal with 
this matter precisely upon the principles which 



1.V2 PRACTICE OF EXGIJSH COURT OF CHANCERY. 

LECTCRB govern the English Court of Chancery, the facts of 
the case are possibly such as would give the 
plaintiff a right of suit even before the expiration 
of the time agreed upon for repayment of the prin- 
cipal debt. For, whenever that has occurred by 
reason of which the mortgagor has lost his right 
under the deed to call for a reconveyance of the 
property, and he can only get back the mortgaged 
premises bv virtue of the right of redemption which 
the Court of Equity still preserves to him. then also 
that Court allows the mortgagee to come in and 
insist that the mortgagor shall elect between the 
exercising of this right of redemption and being 
foreclosed. But we think that this mortgage trans- 
action, notwithstanding that it wears a completely 
English aspect, falls within the operation of Regu- 
lation XVII of 1806. It is in all respects parallel 
with the mortgage common in this country, which 
is effected by means of a bill of absolute sale, 
.ther with a contemporaneous ekrar for recou- 
m ; and mortgages of this sort have always 
M being subject to the Regulation. 
The words 'conditional sale' as explained by the 
amble, are broad enough to cover them, and 
there is no doubt that they are especially within 
the mi nst which the enactment was 

directrd. This being so, the mortgagee can only 
iin a foreclosure by following the procedure 
\\hicu is laid down by section 8 of the abovemeu- 



"STIPULATED PERIOD." 153 

tioned Regulation. And although there is some 



v. 
ambiguity in the words of that section relative to 

the time when the mortgagee may first prefer his 
petition for foreclosure, this is cleared up by refer- 
ence to the previous section. The last clause of 
the 7th section runs thus : ; * The whole of the 
provisions contained in section julation I 

of 1798, and section 12. Regulation XXXIV 
of 1803, as applied therein to the stipulated 
period of redemption, are declared to be equallv 
applicable to the extended period of one year 
granted for an equitable right of redemption by 
this Regulation." 

" This makes it evident that the year of grace, 
commencing as it does with the notification which 
follows on the mortgagee's application' for foreclo- 
sure, is intended by the Legislature to be additional 
to the period which is stipulated for redemption 
in the mortgage contract ; and, therefore, it follows 
that the application itself cannot be made before 
the expiration of that ; stipulated period.' 

" Now the stipulated period of redemption referred 
to by the Legislature in this Regulation appears to us 
to be die whole period prescribed by the mortgage 
contract for the performance of the conditions, upon 
the fulfilment of which the mortgagor is to be 
entitled to a reconveyance. We do not think that 
it in any case means less than this, or depends 

upon whether the mortgagor dulv performs all those 

i 




154 "STIPULATED PERIOD." 

LECTITBE conditions or not. We see no reason for supposing 
that the Legislature by those words spoke, not of 
the period of redemption originally specified in the 
contract (as the words themselves certainly imply), 
but merely of the shorter period during which the 
mortgagor by performance of the conditions may 
have preserved his strict right to redeem under the 
contract. 

" From the very object of the Regulation it is 
obvious that the franiers of it had expressly in 
view the case of a mortgagor who fails to perform 
the conditions necessary to give him the contract 
right to redeem, and if they thought of the ' stipu- 
lated period' as a period terminating in the first 
default of the mortgagor, they would surely have 
used some apter expression than this to convey their 
meaning. 

" According, then, to our view, in the case before 
us the ' stipulated period ' did not expire until the 
4th September 1868, and consequently both the 
presenting of the petition for foreclosure and the 
ill ing of this plaint occurred before the mortgagee 
had any right to take a single step towards fore- 
closing the mortgagor's equity of redemption. All 
the proceedings in this matter are, therefore, inopera- 
tive : the suit is without legal foundation and must 
be dismissed." (13 W. R., 364; S. C., 5 B. L. R., 
380.) 

I shall presently ask you to contrast the case of 



RIGHT OF MORTGAGEE TO CALL IN MONEY. 155 

Shorosliee Bala with another recent case in which LECTUEK 

v. 
also a question arose as to the meaning of the words 

" stipulated time." But before I do so I wish to make 
one observation. The Regulation seems to provide 
only for that class of mortgages in Bengal in which 
a forfeiture takes place by reason of the "money 
advanced not being repaid within a stated period," 
and although it is perfectly true that a forfeiture for 
breach of any other condition is equally within the 
mischief of the Act, the statute does not in terms 
embrace such cases. 

According to the law as administered in the 
English Court of Chancery, and which is followed 
in the other provinces, the mortgagee is entitled to 
sue at any time after default in payment of interest, 
where his right to do so is not qualified by a cove- 
nant not to call in the money during a certain 
period. 

As the law, however, stands at present in this 
Presidency, the mortgagee cannot call upon the 
mortgagor to elect between exercising his right of 
redemption and being foreclosed at any time before 
the period fixed for the repayment of the loan 
secured by the mortgage, whatever may be the 
nature of the covenants contained in the deed. 

The case of Omachurn Chowdhry against Behary 
Lall Mookerjee (21 W. R., 274), however, shows 
that the object of the mortgagee may be indirectly 
accomplished by the fixing of an early date for the 



"STIPULATED PERIOD." 

LECTUBE repayment of the money, followed by a covenant that 
v the money shall not be called in for a certain term 
if the interest is paid regularly, and the other cove- 
nants observed by the mortgagor. The distinction 
may seem to be somewhat refined, but it seems to be 
the only way in which the rights of the parties can 
be reconciled with the enactments contained in the 
ijengal Regulation. 

In the case of Omachurn Chowdhry against Behary 
Lall Mookerjee, the question arose upon a mortgage 
deed in the English form by which the 3rd of January 
1866 was fixed as the date for the repayment of the 
loan. This was, however, accompanied by a proviso 
that in the event of the debtor continuing to pay the 
interest on the principal sum regularly, the money 
should not be called in by the creditor before the 
3rd of July 1871. The debtor having failed to 
pay the interest regularly, the mortgagee proceeded 
to foreclose under Regulation XVII of 1806 without 
waiting till the extended period mentioned iu the 
proviso. It was contended for the mortgagor that 
the application was premature, as the 3rd of July 
1871 was the "stipulated period" for the repayment 
of the loan within the meaning of the Regulation. 
The contention, however, was overruled, the Court 
observing that the last clause in the deed had not 
the effect of making the 3rd of July 1871 the 
stipulated period to which the Regulation would 
to the case of Shoroshee Bala, 



ENGLISH MORTGAGES. 157 

Chief Justice Couch, who gave the judgment of the LECTURE 
Court, observed, " That is a different case from the 
present ; and the decision rather supports the view 
which we take in this case, namely, that we are to 
look at the time which is stipulated for the payment 
of the principal sum, and that the intention of the 
parties is to be collected from the whole of the 
deed. To my mind, in all these cases, it is a ques- 
tion of intention, what have the parties fixed upon 
as the time for payment." 

You will see that Sir Richard Couch says that 
the question is one of intention. This is no 
doubt perfectly true, and yet the language is some- 
what misleading. In English mortgages a very 
early day is generally appointed for the repayment 
of the loan, but it is seldom "intended" that the 
principal is to be paid on the day named in the 
condition. Now, suppose the question arose under 
the Regulation, whether or not the day named in the 
deed was that which the parties intended to be 
the stipulated time for repayment; I suppose the 
question would be answered in the affirmative, 
although in a certain sense it might be said that the 
parties knew very well that the repayment of the loan 
would not be insisted upon on the very day mentioned 
in the deed. The fact is, the words "intended" and 
" intention " are somewhat ambiguous, and, unless 
clearly explained, apt to be misleading. 

To return to the provisions of section 8 of 



158 "LEGAL REPRESENTATIVE." 

I-BE Regulation XVII of 1806. We find that the applica- 

'- tion must be preceded by a demand for payment. It 

is, however, not necessary that the demand should 
be for the specific sum which may be ultimately 
ascertained to be due. (Forbes v. Amerunnissa, 
10 Moo. Ind. A pp., 340.) Indeed it is very doubtful 
whether a foreclosure, otherwise regular, can be 
questioned merely on the ground that it was not 
preceded by a demand for payment. 

The section then points out the Court to which the 
application should be made, and the only point 
which it is necessary to notice on this part of the 
enactment is, that where the properties are situated in 
two districts, the application may be made to either 
of the Judges within whose jurisdiction the property 
or a portion of it is situated. (Rashmonee Debea 
v. Prankissen Doss, 4 Moo. Ind. App., 392.) 

The statute next defines the duty of the Judge 
on receiving the application, who is directed to cause 
the mortgagor or his legal representative to be 
furnished with a copy. Now the expression "legal 
representative" has given rise to a good deal of 
discussion. The earlier authorities were all reviewed 
in Gunga Gobind Mondul v. Banee Madhub 
(iliose. (11 W. R., 548; S. C., 3 B. L. R., 172), 
in which the question was whether the pur- 
chaser of a portion of the mortgaged property 
I (lit it k-d to notice. Mr. Justice Markby, in 
dei the judgment of the Court, observed: 



PURCHASER OF MORTGAGOR'S RIGHTS. 159 

" The question turns entirely on the construction to LECTUBE 
be given to the words 'legal representative' in 
Regulation XVII of 1806. In the first place, it 
is contended broadly that those words did not mean 
the legal representative of the mortgagor in respect 
of the particular property mortgaged, but universal 
legal representative, such as an heir : and there is 
no doubt some color for this contention. These 
words are sometimes used in the latter sense, as 
for instance, in section 210 of the Code of Civil 
Procedure, and this is the idea which these words 
would at first sight rather suggest to my mind. 
But it appears to me to have been settled by long 
practice and authority that they were not used in 
this Regulation in this sense. The late Sudder 
Court held that the purchaser at a sale in execution 
of civil process is entitled to notice, and that 
doctrine has, I believe, ever since been acquiesced 
in. Now, this completely negatives the con- 
struction contended for. An auction-purchaser, 
as he is called, is not the universal legal representa- 
tive of the mortgagor ; he is only the assignee of 
a portion of his property. 

" It also appears to me to have been decided by a 
great preponderance of authority in this Court 
(although I admit that the decisions are not alto- 
gether reconcilable), that a purchaser out-and-out of 
the mortgagor's interest, whether by public or 
private sale, and whether he be in possession or not, 



160 PURCHASER OF MORTGAGOR'S RIGHTS. 

; -RE must be served with notice, except where any aliena- 
tion of the mortgagor's interest has been prohibited 
bv contract between the mortgagor and mortgagee. 
It is not necessary to go through the cases which 
are all collected in Macpherson on Mortgages, 5th 
rdition, page 179. 

" Nor do I think that there is any ground for put- 
ting upon these decisions the restrictions which 
have been now contended for, namely, that they do 
not apply to cases where the whole of the property 
comprised in the mortgage has not been sold by the 
mortgagor, or to cases where the mortgagee has 
no notice of the subsequent sale, both which pecu- 
liarities are said to be found in the case now under 
consideration. I do not see that a purchaser out 
and out of a distinct and definite portion of the pro- 
perty is in a different position from a purchaser of 
the whole. And as to the question of consent, I 
see no ground whatever for introducing that consi- 
deration. If, as is now decided, the words 'legal 

' o 

representative ' include an assignee of the mortgaged 
property, it appears to me that they must include 
all suck assitrnees, and that to make a distinction 
let \\rni a>-i - iiincnts to which the mortgagee has or 

o o O 

not consented, would be an unwarrantable addi- 
tion to the provisions of the Legislature." 

We thus find that a purchaser of a part of the 
'" property is a legal representative equally 

with an assignee of the whole of the property. In 



"LEGAL REPRESENTATIVE." 161 

the case of Mohun Lall Sukul v. Brojonath Kundu LECTURE 
(10 Moo. Ind. App., 1), the words were construed in a 
still more extended sense. In that case the mortgagee, 
after an unsuccessful attempt to withdraw an attach- 
ment which had been taken out against the mort- 
gaged property by a judgment-creditor of the mort- 
gagor, applied to the District Judge for foreclosure 
under Regulation XVII of 1806. The notice of 
foreclosure was served only on the widow and heiress 
of the mortgagor, and not on the creditor by whom 
the property had been taken in execution. The 
property was subsequently sold under the attach- 
ment which had been unsuccessfully contested by 
the mortgagee, and the purchaser under the execu- 
tion, as the assignee of the debtor's equity of 
redemption, brought a suit for possession against the 
mortgagee upon the ground that the mortgage debt 
had been paid off from the rents and profits of 
the mortgaged property. The mortgagee in his 
defence relied upon the proceedings taken by him 
under the Regulation, and contended that the equity 
of redemption had been foreclosed. The Privy 
Council, however, were of opinion, that there was 
no valid foreclosure as no notice had been served 
upon the attaching creditor; Lord Justice Knight 
Bruce who delivered the judgment of their Lord- 
ships, observing that the mortgagee, when he filed 
his application for foreclosure, not only had notice 

that the interest of the mortgagor had been taken 

21 



JUDGMENT CREDITOR OF MORTGAGOR. 

UBE in execution, but was actually disputing the right of 

y 

L the creditor to put up that interest to sale. Under such 

circumstances his Lordship thought that the notice 
ought to have heen served on the decree-holder, 
adding, " It was quite clear upon the authorities that 
if the sale had taken place before the application for 
foreclosure, such application could not have been 
effectual unless the purchaser had been served with it." 
This reference to the peculiar circumstances of the 
case would seem at first sight to suggest that it was 
not decided solely with reference to the meaning of the 
words "legal representative" in the Regulation, but 
this decision must be read with another decision of 
their Lordships (Patiabhiramier \ . Vencatarow,! B. 
L. R.,p. 136), in which it was held that in the absence 
of any express legislative enactment, the interest of 
the mortgagee becomes absolute according to the 
terms of the contract by the mere failure of the mort- 
gagor to redeem. We are therefore bound to suppose 
that in the earlier case of Mohun Lall Sukul, the 
Privy Council considered that the words " legal repre- 
sentative" were sufficiently wide to embrace an attach- 
ment creditor who, as we shall hereafter see, acquires 
a >ort of statutory hypothecation by virtue of the 
attachment. It follows that a puisne mortgagee, 
whether by way of simple mortgage or conditional 
sale, is entitled to notice under the provisions of the 
illation. (Nuddlar Chand Chuckerbutty v. Roop 
22 W. R., p. 475.) 



NOTICE OF FORECLOSURE. 163 

The Regulation is silent as to the person on LECTURE 
whom the notice of foreclosure is to be served when 
the person entitled to redeem is an infant. When 
a guardian has been appointed by the Civil Court, 
or the estate has been taken charge of by the Court 
of Wards, there can be no difficulty whatever, ser- 
vice on the guardian being a perfectly good service. 
If, however, no guardian has been appointed, it would 
seem that service on the person who would have a 
preferable claim to the guardianship of the minor 
would be deemed a good service. (Debee Persaud 
v. Manu Klian, 2 AIL, 444. See also Rashmonee 
Debea v. Prankissen Doss, 4 Moo. Ind. App., 392.) 
The safest course, however, for the mortgagee 
would be to apply to the District Court for the 
appointment of a guardian, who might be served 
with the notice of foreclosure. 

Where there are more mortgagors or legal 
representatives of such mortgagors than one, the 
notice ought to be served on each of them. A more 
difficult question arises when the mortgage is exe- 
cuted by one of several co-sharers, a practice not 
uncommon in this country, but under circumstances 
under which if the transaction had been an out-and- 
out sale, it would be binding upon all the coparcen- 
ers. Thus, for instance, A, the managing member 
of a joint Hindu family, executes a mortgage of an 
estate belonging to the joint family, the other mem- 
bers assenting to the transaction, either according to 



FORECLOSURE. 

LECTURE the usual practice by subscribing their names as 

y 

attesting witnesses, or otherwise ratifying the tran- 
saction. There is little doubt that in such cases if 
the mortgagee is not aware of the rights of the other 
members, it would be sufficient if the notice is served 
on the person by whom the mortgage was exe- 
cuted. The difficulty arises only where the mort- 
re is aware of the fact that the mortgagor is not 
the sole owner. It would seem, although the autho- 
rities are not very clear or consistent on the point, 
that even in such cases there may be a valid fore- 
closure on the foundation of a notice served only on 
the person who is the mortgagor on the face of the 
instrument by which the charge is created. (S. D. A., 
1849, p. 36; S.D. A., 1856, p. 923 ; S.D. A., 1852, p. 423.) 
I may mention that persons deriving title subse- 
quently to the application of the mortgagee to fore- 
close are not entitled to any notice. If it were 
otherwise, proceedings in a foreclosure suit would 
be endless, as a fresh alienation might be made every 
day in the course of the proceedings. (The Bishop of 
n'indiesterv. Paine, 11 Vesey, 194; see also Bha- 
nooinnttij ChnwJrnin v. Prcni Clutml Neogee, 15 B. 
I,. 11., 28.) The rule, however, as I have already 
c-xplainc-d, does not apply to a purchaser under an 
ration. wh(i' jMirdia.se, although subsequent in 
date to the application for foreclosure, was made 
under an attachment executed before any application 
to foreclose by the mortgagee. (Anundmoyee Dassea 



FORECLOSURE. 1 65 

v. Dhunindro Chundtr Mookerjee, 16 W. R., P. C., LECTURE 
19; S. C., 14 Moo. Ind. App., 111.) In such cases, - 
liowever, it would seem that notice to the execution 
creditor would be sufficient. As to the nature of 
the service, it must, where practicable, be personal, 
and substituted service will not be good except 
where the mortgagor is shown to be keeping out 
of the way. In the case of Syud Esaf Ali Khan 
v. Mussamut Azumtoonessa (W. R., 1864, p. 49), 
Mr. Justice Norman, in delivering the judgment 
of the Court, said, " We may observe that, by 
the section now under consideration, the notification 
is not merely a preliminary proceeding leading up 
to a judgment of foreclosure to be subsequently 
pronounced in Court. It not only fixes the date 
from which the period during which the mort- 
gagor is to retain the right to redeem is to be 
computed, but it is of itself the operative act in 
the foreclosure proceeding. We think, therefore, 
that the service of the notice must be evinced by 
the clearest proof, and must in all cases be, if not 
personal, at least such as to leave no doubt on the 
mind of the Court, that the notice itself must have 
reached the hands, or come to the knowledge of, the 
mortgagor." 

You will observe that the Regulation directs 
that a copy of the application should be furnished 
to the mortgagor or his legal representative. This 
provision is mandatory and not merely directory, 



16(5 DISTINCTION BETWEEN MANDATORY 

LECTUKK and an omission in this respect will, it seems, vitiate 
the whole proceedings. In the case of Santi Ram 
Jana v. Modoo Mytee (20 W. R., 363), where the 
mortgagor had not been served with a copy of the 
application, the Court observed, " It is urged, first, 
that the notice contained all the information which 
would be contained in the written application; and, 
secondly, that it was not the fault of the mortgagee, 
but of the Court peon, that the mortgagor was not 
furnished with a copy of the written application. 
But these are not considerations upon which we 
are at liberty to enter. The law prescribes two 
conditions which are to be fulfilled before a mort- 
gage can be foreclosed, and we cannot say that the 
mortgagee before us, who has only fulfilled one of 
them, is in a position to foreclose." (See also 
Denonatk Gangooly v. Nursing Per shad Dass, 
22 W. R., 90.) 

The Allahabad Court has carried the principle of 
a close adherence to the provisions of the Regula- 
tion somewhat further, holding that a notice of fore- 
closure bearing the seal of the Court issuing it, but 
K (1 only by the Munsirim, and not by the Judge, 
U not a sufficient compliance with the law, and can- 
not be the foundation of a decree for foreclosure. 
'// llnrlall v. Manick Pal, 3 AIL, 176.) In 
in- that this is carrying the doctrine further 
than the Calcutta High Court has done, I do not 
mean to suggest that the decision is not perfectly 



AND DIRECTORY ENACTMENTS. 167 

good law, although it may possibly work hardship LECTURE 
in particular cases. At any rate it is better to - 
adhere closely to the plain directions of a statute 
than to fritter it away by calling in the distinction 
between mandatory and directory enactments, a 
distinction which, unless carefully fenced in, would 
introduce the greatest uncertainty into the law. 

An examination of the general question to which 
the discussion has conducted us would be beyond 
the range of these lectures. Those of you who 
wish to know more on the subject may consult the 
following English cases. (Morgan v. Parry, 17 C. B., 
334 ; Henderson v. The Royal British Bank, 7 E. and 
B., 356; compare Bowman v. Blyth, 7 E. and B., 
26; and Friend v. Dennett, 4. C. B., N. S., 576.) 

I may here mention that the notification to the 
mortgagor ousrht to tell him distinctly that if he do 

O O O <J 

not redeem the mortgage within one year, the mort- 
gage will be finally foreclosed, and the conditional 
sale will become absolute. In one case, when the 
notice, after stating that an application had been 
made for the purpose of foreclosing the mortgage, 
called upon the mortgagor to appear and state any 
objection which he might have to the proceeding, the 
Court held that there was no notification as directed 
by the law, and refused to make a decree for 
foreclosure. (Bheekhun Khan v. Bechun Khan, 
3 All, 35.) 

To return once more to the Regulation : we find 



1 ( g FORECLOSURE. 

LBCTUHE tliat if everything is regularly done, the conditional 
sale becomes absolute unless the mortgagor takes 
the proper steps for the purpose of protecting his right 
of redemption within one year from the date of the 
" notification." I shall consider in the next lecture 
the steps which the mortgagor must take for that 
purpose. It is, however, necessary to state that 
these proceedings are not judicial proceedings, and 
anv question between the parties may be raised in a 
regular suit. (10 Moo. Ind. App., 340.) 

" It has been ruled by the Circular Order of the 22nd 
of July 1813, No. 37, and has ever since been settled 
law, that the functions of the Judge under Regulation 
XVI of 1808, section 8, are purely ministerial, and 
that a mortgagee after having done all that this Regu- 
lation requires to be done in order to foreclose the 
mortgage and make the conditional sale absolute, 
must bring a regular suit to recover possession if 
he is out of possession, or to obtain a declaration 
of his absolute title, if he is in possession. 

" In that suit the mortgagor may contest on any 
sufficient grounds the validity of the conditional 
sale, or the regularity of the proceedings taken 
under the Regulation in order to make it absolute. 
II- may also allege and prove, if he can, that 
nothing is duo, or that the deposit, if any, which ho 
has made, is sufficient to cover what is due; but 
the i>suc. in so far as the right of redemption is 
concerned, will be whether any thing at the end of 



DECREE FOR FORECLOSURE. 169 

the year of grace remained due to the mortgagee, LECTURE 
and if so, whether the necessary deposit had been 
then made. If that is found against the mortgagor, 
the right of redemption is gone." (Per Lord Kings- 
down, delivering the judgment of the Judicial Com- 
mittee in Forbes v. Amerunnessa.} 

Although in one sense it may, therefore, be said 
that the title of the mortgagee is not complete till 
he obtains a decree in a regular suit, it must not be 
understood that the decree creates any title in favor 
of the mortgagee. It only establishes, beyond all 
question, that as between the mortgagor and mort- 
gagee, the ownership has passed absolutely from 
the former to the latter. The title of the mort- 
gagee in reality dates from the end of the year 
within which the mortgagor is permitted to redeem, 
and it is for this reason that the mortgagee may 
maintain an action for mesne profits against the 
mortgagor for the period between the expiration of 
the year of grace and the actual recovery of the 
land. (Jeora Kliun Singh v. Hookum Singly 
5 Agra, 358. See also Suroop Cliunder Roy v. 
Mo/tender Chunder Roy, 22 W. R., 539.) 

I have been at some pains to explain the real 
character of the proceedings under Regulation 
XVII of 1806, and the relation they bear to the 
regular suit which the Circular Order enjoins, 
because I find there is some misconception on the 

point, arising probably from the observation made by 

22 



170 RIGHT OF MORTGAGEE 

LECTURE the Privy Council in the case of Forbes v. Amerun- 
- nessa that the " title of the mortgagee is not even 
then (when the mortgagee has failed to redeem 
within the year of grace) complete." The context 
shows that all that was meant by these words was 
that the title of the mortgagee might be impeached 
by the mortgagor in a regular suit notwithstanding 
the regularity of the proceedings under the Regula- 
tion; in other words, that the mortgagee's title was 
not so secure as under a decree for foreclosure. 

Before quitting the subject of foreclosure, I wish 
to call your attention to the precise nature of the 
restrictions imposed by the Regulation upon the 
strict rights given by the contract to the mortgagee. 
It has only extended the period of redemption to . 
any time within one year from the date of the noti- 
fication to the debtor that the creditor is desirous 
of enforcing the repayment of the debt, but any 
other covenants which may be contained in the 
deed are left wholly untouched. If, therefore, there 
is a covenant that the mortgagee shall enter upon 
possession on default, he will not be restrained from 
taking possession, although he should attempt to do 
so before foreclosing the debtor's equity of redemp- 
tion. 1 Ie can, however, only take the rents and 
profits as mortgagee, liable to account to the niort- 
or. The question whether a mortgagee in this 
country has :i ri-ht to bring ejectment immediately 
default, was discussed in the case of Denoitath 



TO ENTER ON DEFAULT. 171 

Gangooly v. Nursing- Pershad Dass (22 W. R., 90), LECTURE 
which deserves very careful study. It is true that 
in that case, as well as in the Privy Council cases 
which are cited in the judgment of Mr. Justice 
Markby, the right to possession on default was 
expressly stipulated for, and it may therefore be said 
that none of these cases is an authority for the 
proposition that a right of entry would accrue on 
default where the instrument is wholly silent as to 
any such right, and only provides for a transfer of 
the right of ownership. I, however, venture to think 
that a right of entry may fairly be presumed from the 
express agreement of the debtor that the ownership 
shall pass, although the relation of mortgagee and 
mortgagor is so anomalous that any deduction from 
general principles must be made with caution. (See 
the observations of Mr. Justice Markby in Denonath 
Gangooly v. Nursingh Pershad Dass, 22 W. H., 
90.) Any other construction, however, would 
lead to absurd consequences, as I shall have occa- 
sion to point out to you when I discuss the question 
of limitation, and it seems to me that the only way 
out of the difficulty is to presume that in every 
mortgage there is an implied right of entry given to 
the mortgagor as necessarily accompanying the 
right of ownership, the implied right not being 
controlled by any law, and having the same opera- 
tion as an express stipulation, and for the same 
reasons. There is, however, another class of cases in 



l~'2 DECREE FOR SALE. 

LECTURE which the mortgagor stipulates that on default the 
mortgagee shall have authority to foreclose and to 
take possession after foreclosure as absolute owner. 
In instruments of this class, and they are by no means 
uncommon, I think there is no room for presuming 
any right of entry on default, and I am afraid the 
anomaly to which I have alluded in connection with 
the statute of limitations cannot be avoided. 

I shall now ask you to compare the law of foreclo- 
sure in Bengal with that which obtains in the other 
provinces, and which is based on the practice of the 
English Court of Chancery. The mortgagee wishing 
to foreclose brings a suit praying that an account 
may be taken of the principal and interest due on the 
security, and that the defendant may be directed to 
pay the same by a day to be appointed by the 
Court, or be foreclosed his equity of redemption. 
An account is then taken, and a decree is made for 
payment within a certain time, generally six months, 
the mortgage being foreclosed in the event of 
default, when the mortgagee may obtain an abso- 
lute order for foreclosing. 

I have not been able to discover any reported 

< in which a sale has been ordered instead of 

a foreclosure. In a recent case the High Court 

made a decree for foreclosure, although 

ilio District Court had made a decree for sale. 

\Vr have ieet] that Knglish Courts of equity 

have been armed by u recent statute with exten- 



ELECTION BY MORTGAGEE. 173 

sive powers of directing a, sale instead of a fore- LECTURE 
closure, and it is to be hoped that the Indian Courts 
will follow the same practice. 

I may mention that a decree for foreclosure is 
not binding upon one not a party to the decree. 
It is therefore necessary that all persons entitled to 
redeem should be represented in the suit. Who 
those persons are I shall discuss more fully in the 
next lecture. The question whether a mortgagee is 
entitled to pursue all his remedies concurrently does 
not seem to have been directly raised. In England, 
where the mortgagee suspects his security to be 
deficient, the proper course for him would seem to 
be to proceed against the mortgagor on the collateral 
securities in the first instance, and then apply for 
foreclosure for the deficiency. It is true that the 
mortgagee is at liberty to foreclose and then to pro- 
ceed asrainst the inortgas-or on his collateral securi- 

O O Cj 

ties, but this has the effect of opening the decree 
of foreclosure, and is therefore attended with incon- 
venience. It is difficult to say how the Indian 
Courts will deal with such cases. In Bengal it 
would seem that the mortgagee, if he elect to fore- 
close, will not be suffered to proceed personally 
against the mortgagor even when there is a cove- 
nant for the repayment of the debt. There is no 
provision in the Regulations for re-opening a decree 
of foreclosure, and this of itself would be a ground 
for putting the mortgagee to his election. The 



174 STATUTE OF LIMITATIONS. 

I:RE same difficulty does not occur where the mortgagee 

y 

applies for foreclosure for the deficiency after hav- 
ing proceeded against the debtor personally. 

As in Bengal, the mortgagee is entitled to enter 
upon possession on default subject to his own right 
to foreclose and the right of the mortgagor to 
redeem. There being no distinction between Courts 
of Equity and Courts of Common Law in this 
country, the law will not permit ejectment where 
the mortgagor would have a right to relief in equity. 
In the case of Sitaram Dandekar v. Ganesh Gokhle 
(6 Bom., 121), where the mortgage deed contained 
a clause to the effect that the mortgagee should be 
entitled to possession on default by the mortgagor 
in payment of the interest on the principal money 
secured by the mortgage, the Court refused to make 
an absolute decree for ejectment, and directed the 
mortgagor to pay to the mortgagee the arrears of 
interest due to him within three months, or that 
in default the property should be delivered to the 
mortgagee to be held by him under the terms of 
the inortu-:ii;v bond. 

I will conclude by discussing the question of the 
time within which the mortgagee is permitted to 
rt his rights under the statute of limitations. I 
shall, in the iirst place, discuss the question with 
i -He re nee to Act XIV of 1859, and then with refer- 
ence to Act IX of 1871, the present Statute of 
Limitations. Now, in order to clear up the matter 



PERMISSIVE OCCUPATION. 175 

as mucli as possible, I shall first take up tlie case in LECTURE 
which the mortgagor himself continues in posses- 
sion and is the party defending the suit. It would 
be tedious to go through the various conflicting 
decisions on the point before the law was finally 
settled in the case of Denonath Gangooly v. Nur- 
singh Pershad Dass, in which all the earlier autho- 
rities are reviewed, and a clear and consistent doc- 
trine is laid down. (22 W. K., 90.) 

Now the provision of Act XIV of 1859, which 
is applicable to mortgages, is that laid down in 
clause 12 of the first section of the Act, which 
says, " To suits for the recovery of immoveable 
property, or of any interest in immoveable property, 
to which no other provision of this Act applies 
the period of twelve years from the time the cause 
of action arose." 

The words "cause of action" are nowhere 
defined in the Act, but as pointed out by Mr. Justice 
Markby in Denonath Gangooly's case, which is the 
leading case on the subject, it is clear that two 
things are necessary to constitute a cause of action ; 
a right to possession, and an adverse withholding 
of that right. " If the plaintiff had not a right to 
immediate possession, or if having a right to posses- 
sion the defendants were holding with the plaintiff's 
permission, and acknowledging his right, no suit 
could be brought in the one case, because the right to 
possession had not accrued; and in the other, because 



176 DISTINCTION BETWEEN PEUMISS1VE 

LKCTUBE it had not been disturbed or denied." (Per Markby, 
'- J., in delivering judgment in Denonatk Gangooly v. 
Nursingh Pershad Dass.} Now we have already 
seen that, generally speaking, a right of entry accrues 
immediately to the mortgagee on default, but still 
no cause of action would arise if the mortgagor 
continued in occupation acknowledging the title of 
the mortgagee, and, as is commonly the case, paying 
the interest on the principal sum regularly to the 
mortgagee, who from various causes might be reluc- 
tant to assume possession of the pledge. In such 
a case as this it would be monstrous to contend, 
that by allowing the mortgagor to retain possession 
for a period of twelve years, the mortgagee loses 
his right to the security. " It would be confounding 
adverse occupations with those which have not the 
semblance even of such a character, and would 
establish a bar arising from simple occupation and 
not from the laches of the demandant or others 
before him." (Per Lord Kingsdown, 6 Moo. Ind. 
App., 353.) 

A difficulty, however, may arise in those cases in 
which the mortgagor neither pays any interest nor 
docs anything else to indicate that he acknowledges 
the right of the mortgagee. In such cases it may, 
I think, be fairly presumed, in the absence of any 
evidence to the contrary, that the possession of the 
mort-'a -iily permissive, and cannot, therefore, 

bo urged as a bar to an action by the mortgagee. 



AND ADVERSE OCCUPATION. 177 

If, however, the mortgagor retained possession LECTUEE 
under such circumstances as would rebut the pre- 
sumption of a permissive occupation, the mortgagee's 
suit must fail. " A default may be made by the 
mortgagors, which may give the mortgagee a right 
to sue or to enter into possession (if he chooses to 
assert such right), but which may, notwithstanding, 
have no effect whatsoever in altering the nature 
of the mortgage title. So long as the mortgagor 
in possession, or those who claim under him, assert 
merely a title to redeem, and advance no other title 
inconsistent with it, such possession must primd facie 
at least be treated as perfectly reconcileable with, and 
not adverse to, the title of the mortgagee, and the con- 
tinuation of the lien on the property pledged." (Bul- 
deen v. Golab Koonwar, Agra, Full Bench, 108.) 

It was thought at one time that no cause of 
action could accrue to the mortgagee before 
foreclosure, and as there is no limit as to the 
time within which an application for foreclosure 
may be made, the curious result followed that a 
mortgagee might, if he chose to do so, enforce his 
security at any time, and no safe title could possibly 
be acquired against a mortgagee in this country. 
The doctrine rested on the supposition, which I have 
shown to be erroneous, that no right of entry 
accrued to the mortgagee till foreclosure. I have, 
however, already referred you to a class of securities 

which may possibly admit of different considerations. 

23 



}78 PURCHASER FROM MORTGAGOR. 

LECTUKK I sliall next consider the case in which the rights 

y 

of the mortgagor have been transferred to a third 
person. Now if such third person purchased with 
notice of the mortgage, the same presumption would 
l>e made as to the character of his possession as if 
the mortgagor himself had been in occupation. But 
if the purchase was made without any such notice, 
there can be no pretence whatever for treating the 
possession of the purchaser as permissive, or as that 
of a person holding in privity of the. mortgagor. 
In the case of Anund Moye Dassee v. Dhunindro 
Chunder Mookerjee (14 Moo. Ind. App., Ill), the 
Privy Council observed: "Their Lordships think 
that the title of a judgment-creditor, or a purchaser 
under a judgment decree, cannot be put on the same 
footing as the title of a mortgagor or of a person 
claiming under a voluntary alienation from the mort- 
gagor. The3 T are of opinion that the possession of a 
purchaser under such circumstances is really not the 
possession of a person holding in privity of the mort- 
gagor, or holding so as to be an acknowledgment 
of the continuance of the title of the morts:ao:ee. 

o o 

The possession which the purchaser supposed he 
iKMjuired was a possession as owner. He thought 
he was acquiring the absolute title to the property, 
and that he was in possession as absolute owner." 

I have not considered the case of a trespasser 
holding adversely both to mortgagor and mort- 
gagee. If the trespasser enter into possession after 



STATUTE OF LIMITATIONS. 179 

default, there can be no difficulty whatever, as that LECTURE 
would be a much stronger case than that of a pur- 
chaser without notice of the mortgage. The diffi- 
culty arises only when the occupation commences 
before default, and the mortgagor takes no steps for 
the purpose of vindicating his rights. There does 
not seem to be any method in this country by which 
the mortgagee may interrupt the prescription, and 
it would seem to be a hardship upon him to hold 
that the time would run against him before he had 
acquired a right of entry. The authorities are not 
very clear on the point. In a case reported in the 
Weekly Reporter for 1864, Mr. Justice Jackson 
observed : " The question to be decided is, when 
did plaintiffs' cause of action arise ? They have 
alleged that the date of expiry of their year of 
grace is the date from which the cause of action 
should be calculated. This may be the rule in 
those cases where the mortgagor remains in peace- 
able and undisturbed possession of the estate mort- 
gaged. But the rule no longer stands good when 
the mortgagor is dispossessed, and his title disputed, 
and another person obtains possession of the estate. 
The possession of this new holder becomes a posses- 
sion adverse to both the plaintiff's mortgagor and 
to the plaintiff, the mortgagee. If the mortgagee 
submits to this possession for more than twelve 
years, he loses his right to contest the title of the 
new holder. His cause of action against the new 



180 COURTS ESTABLISHED BY ROYAL CHARTER. 

L-UE holder arose on the date on which the latter obtained 
v 
such adverse possession of the mortgaged estate. 

Circumstances may occur which will defer the mort- 
gagee's cause of action. If the mortgagor, for 
instance, contests the title of the new holder, and 
a litigation ensues between them, the mortgagee 
is not bound to take action upon his mortgage until 
that litigation is decided. But if the mortgagor's 
title is rejected, and his possession is disturbed by 
an adverse one, the mortgagee's cause of action 
against the new holder commences from the date on 
which the latter obtains possession on his title 
adverse to the mortgagor, which has been con- 
firmed by the Courts. This is the law on the 
subject which has been laid down in the Privy 
Council." (Prannath Roy CJiOwdhry v. Rookeea 
Begum, W. R., 1864, p. 375.) 

I may mention that section 6 of Act XIV of 1859 
contained a special enactment with regard to suits 
on mortgages in Courts established by Royal 
charter. "In suits in the Courts established by 
Royal charter by a mortgagee to recover from 
the mortgagor the possession of the iniuioveable 
property mortgaged, the cause of action shall be 
deemed to have arisen from the latest date at which 
any portion of principal money or interest was 
paid on account of such mortgage debt." 

It might perhaps be plausibly argued upon the 
language of this section, that in cases to which it 



STATUTE OF LIMITATIONS. 181 

did not apply, the mortgagee's right of action would LECTUBE 
not be kept alive by the payment of any portion - 
of the principal money or interest. This, however, 
does not necessarily follow. The object of the 
legislature was probably to put mortgages in the 
English form, when sued upon in the Supreme Court, 
on the same footing as English mortgages. If this 
be a correct view, it would seem that, under Act 
XI Y of 1859, English mortgages were placed in 
a less favorable position as regarded limitation than 
Mofussil mortgages, for, in the latter case, as we 
have already seen, the cause of action did not neces- 
sarily arise with the last payment of any portion 
of the principal or interest. 

The new Act (IX of 1871) contains a distinct 
provision for suits for possession of immove- 
able property by mortgagees. The period allow- 
ed under the new law is the same as that 
under the old statute, but it runs not from the 
accrual of the cause of action, but from the 
time when the mortgagee first becomes entitled to 
possession. It may, therefore, be presumed that 
the old doctrine of adverse and permissive occupa- 
tion has been abolished, and the mortgagee must 
sue for possession within twelve years of the date 
fixed for the repayment of the loan. In a recent 
case the Court observed : " The question raised in 
the earlier cases as to the accruing of the cause of 
action does not arise here, the legislature having iu 



182 PERMISSIVE OCCUPATION. 

LECTURE Article 135, Act IX of 1871, substituted for that 

y 

occurrence a specific time, viz., the time when the 
mortgagee was first entitled to possession. This 
was confessedly the 29th Cheyt 1260. 

"la this view of the case, the nature of the 
defendant's possession, whether adverse or permis- 
sive, is immaterial. The mortgagee having his 
time expressly limited by the Act was bound to 
guard himself, and if he did not do so, and allowed 
the time to pass, he loses his remedy." (Lall Mohun 
Gungopadliya v, Prosonno Cliunder Banerjee, 24 
W. R., 433.) 

I may, however, venture to suggest that the clause 
was not perhaps intended to apply to a case in 
which the mortgagor is permitted to retain posses- 
sion so long as he pays interest. In such cases, I 
presume, a new cause of action, or right of entry, 
would accrue on the determination of the permission. 
Tims, suppose a landlord makes a lease for a term 
of years ; according to the provisions of the new 
Act, the landlord would be bound to bring ejectment 
within twelve years of the determination of the 
truancy. But suppose the tenant holds over with 
the consent of the landlord, who receives rent from 
the tenant, it would he absurd to contend that the 
landlord would be barred if he allowed the tenant 
! retain possession, for a period of twelve years. 
au.Mver to such a contention would be, that 
there was a fresh contract between the parties, and 



STATUTE OF LIMITATIONS. 183 

I conceive that the same answer would be given to LECTURE 
a defence by the mortgagor founded on clause 135, 
the mortgagor having been all the while in posses- 
sion with the assent of the mortgagee, who con- 
tinued to receive the interest regularly. The word 
"first" may possibly create some difficulty, but it 
was probably introduced for the purpose of indi- 
cating clearly that it was not intended that the 
period should run from the end of the year of 
grace. (For Courts established by Royal Charter, 
see art. 149 of the Act.) 



LECTURE VI. 



Equity of redemption Origin of expression Position of mortgagor 
before foreclosure Right to redeem Bengal Regulation XVII of 
1806 Recognized by Courts of Justices in other Provinces Opinion 
of the Privy Council Puttai'r>'<inii<:r v. Vcncaitu Row Naikrr 
" Once a mortgage always a mortgage " Meaning of maxim 
Persona entitled to redeem Regulation XVII of 180G Practice of 
English Courts of Chancery Mortgage security indivisible Effect of 
mortgagees purchasing portion of mortgaged property Contribution 
Redemption under Bengal Regulations Deposit or tender What a 
good deposit Rukca Brtjum v. Prannath Roy Chowdry Time within 
which deposit must be made Practice in Bombay and Madras 
Limitation Acknowledgment Effect of acknowledgment by one of 
several mortgagees Difference between English Statu te and Indian 
Act. 

I NOW propose to call your attention to the posi- 
tion of the mortgagor before the mortgage is finally 
foreclosed, and the ownership of the pledge trans- 
ferred from the debtor to the creditor. I have already 
pointed out that the mutual rights and obligations 
of the parties to a mortgage transaction are so 
closely interwoven with one another, that, in discuss- 
ing the rights of the one, you necessarily suggest 
those of the other. There are, however, some 
points which will be more conveniently dealt with 
in the present lecture, and it is to these points that 
I shall confine myself. 



" EQUITY OF REDEMPTION." 185 

The interest which resides in the mortgagor LECTURE 

vi. 
before foreclosure is known in this country by an - 

expression borrowed from the English law an 
expression which is open perhaps to more serious 
objection than others which we have borrowed from 
the same source. The interest of the mortgagor is 

o o 

known as the equity of redemption, or, as it is some- 
times called, the right of redemption. Now, even the 
expression " right of redemption " is not wholly 
unexceptionable. It suggests the idea, in common 
with the kindred expression " equity of redemption," 
that the interest of the mortgagor is a bare right ; 
something essentially different from what we call 
ownership, which is supposed to be vested in some 
other person who must be the mortgagee. It would, 
however, be more correct to say, that the ownership 
resides in the mortgagor notwithstanding the mort- 
gage, the mortgagee acquiring by the contract only 
the right to foreclose. If we, however, examine 
the history of the English law of mortgage, we shall 
find that the expression "equity of redemption" first 
made its appearance at a time when the mortgagor 
was supposed to have parted with the estate retain- 
ing only the right of redemption or repurchase a 
right, which being under the peculiar protection of 
equity, canie to be known as the equity of redemp- 
tion. The expression originally served to distin- 
guish the interest of the mortgagor from the " estate " 

which was supposed to pass to the mortgagee. In 

24 



MORTGAGOR IN POSSESSION 

IRE time, however, this right came to be regarded as an 

VI 

estate by the Courts of Chancery possessing all the 
incidents of an equitable estate in land. The 
original expression, however, was retained to denote 
the interest which remained in the mortgagor, 
although the nature of that interest had been greatly 
modified by the action of the English Courts of 
Equity. The expression " equity of redemption" 
is, therefore, an expression peculiar to the English 
law, and although its introduction into India may 
be regretted, it would be idle to protest against it 
at this time of day. I do not wish to be hypercri- 
tical, and 1 have made the foregoing observations, 
simply because I know of instances in which the 
whole discussion has been materially colored by 
notions, which would not have suggested themselves 
if the argument had not been conducted in the tech- 
nical language of the English law. 

The position of the mortgagor in possession 
has given rise in England to a good deal of, not 
altogether profitable, discussion, which, however, 
cannot find any place in our law. The mortgagor 
does not part with the ownership of the property 
by pledging it to his creditor by way of conditional 
Mile, and his position before foreclosure does not 
differ in any material feature from that of the mort- 
gagor by way of simple mortgage. It has been said 
(S, D., 1859, p. 1273), that the position of the 
mortgagor in possession is that of a trustee. He is 



NOT A TRUSTEE. 187 

not the absolute owner of the land, but holds it LECTURE 

VI. 

subject to the rights of the mortgagee. This pro- 
position, however, must be received with consider- 
able reserve. It is true that the indefinite power of 
dealing with a property which we call ownership is 
in some respects controlled by a mortgage, but I 
venture to think it is not an accurate use of 
language to say that the mortgagor becomes a 
trustee for the mortgagee. 

From what I have already said, it must be clear to 
you that the mortgagor is competent to alienate the 
property notwithstanding the mortgage, although 
he cannot pass any greater interest than he himself 
possesses. The assignee must take subject to the 
rights of the mortgagee, who. in the event of a fore- 
closure, acquires the property free of all subsequent 
incumbrances. The mortgagor may either transfer 
the property absolutely, or create a second mortgage, 
subject, however, to the same limitation. It is hardly 
necessary to add that the interest of the mortgagor 
may be taken in execution, although the sale must 
be subject to the charge created in favor of the mort- 
gagee. In short, the mortgagor is competent to 
deal with the property in any way he likes, so that 
the rights of the mortgagee are not defeated. I 

O O O 

may add, that the mortgagor in possession is never 
liable to account for the rents and profits received by 
him. This is the law in England, and it also seems 
to be the law in this country. The mortgagor, 



188 EQUITY OF REDEMPTION IN ENGLAND 

LECTURE however, while in possession, must not do any- 
vi. 
- tiling to impair the security of the mortgagee, and, 

as I have already said, there can be very little doubt 
that he will be restrained from committing wilful 
waste. (S.D., 1859, p. 1273.) 

We have already seen that, notwithstanding the 
mutual agreement of the parties, the ownership does 
not pass from the mortgagor to the mortgagee 
immediately on default. The mortgagor, notwith- 
standing the default, continues to be the owner, or, 
to use the Iaii2fiia2:e of the English law, retains an 

o O o 

equity of redemption, which may be successfully 
asserted against the mortgagee. I told you in the 
last lecture that this right was created for the first 
time in Bengal by Regulation XVII of 1806. No 
such provision is to be found in the statute law 
relating to the other Presidencies, but the doctrine 
of the English Court of Chancery, that the time 

j i 

stipulated in a mortgage is not of the essence of the 
contract, has been introduced into those provinces 
by the Courts of Justice as a rule founded in 
41 equity and good conscience." In the case of 
Puttaoeramier v. Vencatta Row Naiker, however, the 
Lords of the Privy Council observed, that, in the 
absence of any known rule of law, a Court of 
Justice is not at liberty to qualify the rights and 
obligations of the parties as defined by their mutual 
contract. " What is known in the law of England as 
' the equity of redemption ' depends on the 



RECOGNISED BY OUR COURTS. 189 

doctrine established by Courts of Equity, that the LECTUKE 
time stipulated in the mortgage deed is not of the - 
essence of the contract. Such a doctrine was 
unknown to the ancient law of India; and if it 
could have been introduced by the decisions of the 
Courts of the East Indian Company, their Lordships 
can find no such course of decision." (Per Colvile, 
Sir James, 13 Moo. Ind. App., 560; S. C., B. L. R., 
136; 15 W. R., P. C., 37.) Their Lordships, how- 
ever, concluded by observing, " It must not then be 
supposed that, in allowing this appeal, their Lord- 
ships design to disturb any rule of property estab- 
lished by judicial decisions so as to form part of 
the law of the forum, wherever such may prevail, 
or to affect any title founded thereon." Since this 
judgment was delivered by the Privy Council, the 
question again came before the High Courts of 
Bombay and Madras, but the learned Judges 
thought that a rule of property had been estab- 
lished in those provinces by judicial decisions which 
ought not to be disturbed, and which the Privy 
Council never designed to disturb. (Shankarbhai 
Gulabbhai v. Kassibhai Vithalbhai, 9 Bom., 69; 
Lakshmi CheUiah Garee v. Krisha Bhupati Devi, 
7 Mad., 6.) 

We thus find that, in nearly all the provinces of 
this country, the debtor retains a right to redeem, 
which is not extinguished by the non-payment of the 
money on the appointed day. This right is .very 



190 ONCE A MORTGAGE ALWAYS A MORTGAGE. 

LECTURE jealously guarded, and in England a large number of 
maxims have clustered round it. One of these is the 
well-known proposition " once a mortgage always a 
mortgage." This maxim requires some explana- 
tion, as the language in which it is expressed is 
likely to mislead the student. It means that no 
agreement of the parties should control the right 
of redemption, but then it has reference only to 
stipulations entered into at the time of the mort- 
gage, and not to agreements entered into subse- 
quently; and, as I shall presently explain, there is 
good reason for this distinction. Any agreement, 
therefore, at the time of the mortgage, by which the 
right of redemption is limited, either as to the persons 
entitled to redeem, or the period within which the 
right must be exercised, is wholly inoperative. Thus, 
for instance, if the mortgagor should agree that 
the right to redeem shall be confined to his life, his 
heirs after his death will be permitted to redeem. 
In fact, no limitation can be successfully imposed on 
the mortgagor's equity of redemption, a right which 
the law will not suffer to be closed or fettered even 

DO 

with the assent of the mortgagor. 

The maxim "once a mortgage alwa} r s a mortgage" 
is a logical corollary to the doctrine which is the 
very foundation of the law of mortgages, that time 
not of the essence of the contract in such 
ti.msictions. The protection which the law 
throws round the mortgagor would be wholly 



ONCE A MORTGAGE ALWAYS A MORTGAGE. 191 

illusory if the mortgagee were permitted to restrict LECTURE 
the right of redemption within such limits as 
he might choose to impose on the mortgagor. 
The debtor, who agrees to forfeit his property if 
the money is not paid on the appointed day, might be 
easily induced by the creditor to waive the 
benefit which the law has secured to him, and this 
accounts for the jealousy with which the right of 
redemption is guarded in every system of juris- 
prudence. There is a curious case which you will 
find in the English books, in which the mortgagor 
was permitted to redeem, although he had solemnly 
sworn never to exercise the right. To the general 
rule that a mortgagee shall not derive any colla- 
teral advantage from his mortgage, English lawyers 
recognise one exception. An agreement securing to 
the creditor a right of pre-emption of the equity of 
redemption is regarded as valid by the English Court 
of Chancery. I am not, however, aware of any case 
in which the doctrine has been followed in India. 

I have already said, that the rule directed against 
any attempt to fetter the equity of redemption 
applies only to agreements made at the time of the 
mortgage, as the law presumes that the debtor 
is then completely at the mercy of the creditor, who, 
unless restrained by the law, might impose his own 
terms, however exorbitant. The parties are at liber- 
ty to contract with one another, in any manner they 
please, after the execution of the mortgage, although 



192 BIGHT TO REDEEM. 

LECTURE such transactions are not, on other grounds, viewed 

L with favor by a Court of Justice. The distinction, 

however, between transactions at the time of the 
mortgage, and those subsequent to the mortgage, is 
extremely important, and must be carefully borne in 
mind. I have heard it seriously argued that a mort- 
gagee may not buy in the equity of redemption, and 
that, except by the process of foreclosure, he cannot 
become the absolute owner of the pledge. This 
would, however, be an unjustifiable extension of the 
maxim, suggested probably by the language in which 
it is frequently expressed. There is another familiar 
maxim in connection with the subject "he who 
seeks equity must do equity;" but I reserve the 
discussion of this maxim for another lecture. 

I propose to discuss in the next place the per- 
sons who are entitled to redeem. Now it may 
be laid down generally that not only the mortgagor 
himself, but also any person having an interest in, 
or lien on, the property, is entitled to redeem. As 
a judgment debt in this country does not create 
in itself a charge on land, it is doubtful if a judg- 
im-nt-creditor, merely as such, has a right of redemp- 
tion, lie has, however, only to attach the property, 
ami as an attachment operates as a statutory hypo- 
thecation, the attaching creditor acquires the right 
to redeem the mortgage. The point was substanti- 
ally decided in the case of Mohun Lall Sukul, to 
which I have already had occasion to refer. 



RIGHT TO REDEEM. 193 

I need hardly add that the right of redemption LECTURE 
may be claimed by the heir or devisee of the mort- 
gagor, and, generally speaking, by any person who, 
either by voluntary or involuntary assignment, 
succeeds to the whole or a portion of the rights of 
the mortgagor in the whole or a portion of the 
mortgaged property. 

This is the present state of the law in Bengal, 
which has been gradually built up on the provi- 
sions of the 17th Regulation of 1806, which impose 
upon the mortgagee the necessity of serving the 
foreclosure proceedings upon the " mortgagor or 
his legal representative," an expression which, as we 
have already seen, has been held by judicial inter- 
pretation to embrace every person who claims an 
interest in the mortgaged property. 

There is no statutory enactment in the other 
provinces, but the law, as it is administered at the 
present day by the Courts of Justice, is, in this 
respect, substantially the same as in Bengal. 

The question has been raised in the Calcutta 
High Court, but, so far as I am aware, not yet 
decided, whether a lessee, claiming under a bene- 
ficial lease created after the mortgage, is entitled to 
redeem. The English law permits the lessee to 
redeem (Keech v. Hall, 1 Smith, L. C., 523), and 
there is little doubt that this ruling will be followed 
in India. The expression " legal representative," if 

wide enough to include an attaching creditor, is 

25 



194 MORTGAGE SECURITY INDIVISIBLE. 

LECTURE surely large enough to embrace a tenant claiming 
'- under a beneficial lease. 

It is necessary to observe that a mortgage secu- 
rity is indivisible, and that no one is entitled to 
redeem a part of the estate in mortgage on pay- 
ment of a proportionate amount of the debt secured 
by the mortgage ; you must either redeem the whole, 
or not at all. Thus, if four brothers, each of whom 
is entitled to a fourth share of an estate, mortgage 
it to a creditor as security for a debt contracted by 
them, one of the brothers cannot redeem his share 
on payment of a fourth part of the debt secured by 
the mortgage. He would, no doubt, have a right 
to redeem the whole, but he cannot redeem a part, 
although there may be no question as to the extent 
of his share. If, however, any one or more of 
several joint mortgagors redeem the whole estate, 
lie will be entitled to possession and receipt of the 
whole of the rents subject to account with his co- 
mortgagors. (Macpherson, p. 112; Fisher's Mort., 
304.) 

You will, no doubt, find in the books several cases 
in which a mortgagor has been permitted to bring 

>uit for redemption of a portion of the mort- 
gaged property, on the allegation that the whole 
of the debt secured by the mortgage has been 

islk-d. These cases, however, are no exception 
to the rule that a mortgage debt is indivisible, for, 
in the cases to which I refer, there is no longer any 




REDEMPTION OF PART. 195 

debt due to the mortgagee. (Hurdeo v. Guneshee LECTURE 
Lall, 1 Agra, 3 ; see also 1 Agra, 36 ; 4 Agra, 33.) 
It would not, however, be always safe to bring such 
an action, and the co-mortgagors should, if possible, 
be placed on the record as defendants if they refuse 
tojoin in the action ; and, although the plaintiff might 
sue for his own share, the suit ought to be brought 
in the Court which would have jurisdiction over the 
whole of the subject-matter. (Unnoda Persaud 
Roy v. Erskine $ Co., 21 W. R., 68.) If a 
different rule were laid down, the* mortgagee 
might be harassed by twenty different suits, and 
although the language used by the Court in some 
reported cases is not free from ambiguity, I venture 
to think that it was never intended to lay down 
the broad proposition that one of several mortgagors 
could sue without making his co-mortgagors party 
defendants. 

Cases in which the interests of the mortgagors 
appear to be distinct and separate on the face of 
instrument are sometimes supposed to form an 
exception to the rule that a mortgage security is 
indivisible. There is, however, no foundation for the 
notion except some carelessly reported dicta in 
Mulik Basab v. Dhana Bebee (5 N. W. P., 220). 
It is true an instrument may be so worded that 
each of the mortgagors may redeem his share on 
payment of a rateable portion of the mortgage debt, 
but such a clause is seldom, if ever, found in a 



106 REDEMPTION OF PART 

LECTITBE mortgage deed, and cannot safely be inferred 
merely from a recital of the different shares of the 
mortgagors in the document. 

To the general rule, however, that a mortgage 
must be redeemed entirely or not at all, there is 
one exception, and that is where the equity -of 
redemption in a portion of the mortgaged property 
becomes vested in the mortgagee himself. In such 
cases the mortgage security is broken up. and the 
mortgagor or his representatives become entitled 
to redeem on payment of a proportionate part of 
the debt charged on the property. Thus, where 
two villages were mortgaged by the same instru- 
ment as security for one sum, and they were both 
subsequently sold under an execution against the 
mortgagor, and one of them was purchased by 
the mortgagee himself, and the other by a third 
person, the execution-purchaser was allowed to 
redeem on paying a proportionate part of the mort- 
gage debt. As pointed out by Morgan, C.J., in 
giving the judgment of the Court in Mahtab Singh 
v. Misree Lall, "A mortgagee is entitled to 
say to each of several persons who may have 
succeeded to the mortgagor's interest, that he shall 
not be entitled to redeem a part of the property 
on payment of part of the debt, because the whole 
and every part of the land mortgaged is liable for 
the whole debt. But it does not follow from this, 
that a mortgagee, who has acquired by purchase 



ALLOWED IN EXCEPTIONAL CASES. 197 

a part of the mortgagor's rights and interests, LECTURE 
is entitled to throw the whole burden of the mort- - 
gage debt on the remaining portion of the equity 
of redemption in the hands of one who has pur- 
chased it at a sale in execution of a decree against 
the mortgagor. Each has bought subject to a 
proportionate share of the burden, and must dis- 
charge it." (2 Agra, 88 ; see also Nathu Sahu v. 
Lalla Ameer Chund, 24 W. R., 24.) 

These cases, however, must be carefully distin- 
guished from another class of cases with which 
they may be easily confounded. The principle 
laid down in Mahtab Singh v. Misree Loll 
(2 Agra, 88) will not apply to a case in which 
the equity of redemption of a portion of the 
mortgaged property becomes vested in one or more 
of several mortgagees, and the reason of this 
distinction is obvious. Where the whole estate as to 
one portion of the pledged property becomes vested 
in the mortgagee, or in all the mortgagees, if 
there are more than one, the mortgagor, if compelled 
to redeem on condition of paying the whole debt, 
would have an action for contribution for the excess 
payment, and thus two suits would be necessary 
in the place of one for the purpose of attaining the 
same end. This reason, however, which is founded 
only upon convenience, does not hold good where 
the purchaser happens to be one of several mort- 
gagees. In such a case the other mortgagees 



J98 RIGHTS OF MORTGAGEE. 

LECTURE could not be sued for contribution, and they might 

VI 

1 very reasonably complain if by the acts of one of 

them the indivisible nature of the security was 
altered. Where, therefore, one of several mortga- 
gees purchases a part of the property mortgaged, the 
case is governed by the general rule, and the pur- 
chaser of another part has no right to redeem 
except on payment of the whole of the mortgage 
debt. (Sobha Sah v. Inderjeet, 5 AIL, 149.) 

We have seen that when the mortgagee, or if 
there are more than one, all of them jointly pur- 
chase the equity of redemption of a part of the 
mortgaged propert}', they cannot insist upon the pay- 
ment of the whole of the debt secured by the mortgage 
as a condition of the redemption of the rest of the 
mortgaged property. Questions, however, of consi- 
derable difficulty sometimes arise when the equity 
of redemption of a portion becoming vested in the 
mortgagee, that of the rest passes to two or more 
different persons. In the case of Nowab Ahmed AH 
Khan v. Jowhir Sing, the estate having been sold 
subject to mortgage to different persons, one of them 
being the mortgagee himself, a purchase? of a por- 
tion of the mortgaged property sought to redeem 
his share on payment of a rateable part of the 
mortgage debt. The purchasers of the other portions 
were not parties to the suit, and the mortgagee 
Hoisting that the plaintiff could not succeed without 
;iu offer to redeem the portion which had passed to 



AND PURCHASER OF EQUITY OF REDEMPTION. 199 

the other purchasers, the Court refused to make any LECTURE 
decree for redemption, being of opinion that the 
mortgagee had a right to insist upon the redemption 
of the whole of the property, with the exception of 
that purchased by himself, on payment of a propor- 
tionate part of the mortgage debt. (N. W. P., 1864, 
425.) 

You will observe that all that the Court ruled in 
the above case was, that the plaintiff was bound 
to offer to redeem the whole of the estate with the 
exception of that purchased by the defendant, and 
not that he was entitled to do so if the mortgagee 
should refuse to part with the shares of the other 
persons. The distinction is important, and is well 
illustrated by the judgment of the Privy Council in 
the subsequent suit for redemption between the 
same parties, in which the plaintiff claimed to 
redeem the whole of the mortgaged property 
with the exception of that which had passed to 
the mortgagee. The defendant, while conceding to 
the plaintiff the right to redeem the portion which 
had been purchased by him, resisted his right to 
redeem the rest. The Court below being of opinion 
that the mortgagee could not be permitted to turn 
round after having " forced the plaintiff to bring the 
second suit," made a decree for redemption in the 
terms of the prayer in the plaint. (Nawab Ahmed 
Ali Khan v. Jowhir Sing, 1 Agra, 3.) From this 
decree there was an appeal to the Privy Council 




200 RIGHTS OF MORTGAGEE 

LECTURE when the mortgagee again insisted upon his right to 
- retain possession of that portion of the estate which 
had not been purchased by the plaintiff. Their Lord- 
ships observed: "The remaining question is what, 
upon the facts found by the Courts below, ought to 
have been their decree. The appellant now complains 
that the plaintiffs have been allowed to redeem as 
against him the villages other than their own village 

o o o 

of Hosseinpore, i.e., to put themselves in his shoes 
as mortgagee in respect of these .villages ; and 
further, that the decrees were wrong in refusing to 
treat him as the owner under a subsequent purchase 
of three- fourths of Rookumpore. 

" The first objection does not come with a good 
grace from the appellant, who defeated the plaintiffs' 
former suit, on the ground that they had not offered 
to redeem the villages in question, and who, in this 
very suit, lias included in his calculation of the 
amount, which, as he alleges, ought to have been 
brought into Court, the shares of the mortgage debt 
which he said were chargeable on those villages. 
The Courts below, however, seem to their Lordships 
to have mistaken the effect of the former decision of 
the Sudder Court. It merely ruled that the plaintiffs 
were bound to offer to redeem the villages in ques- 
tion ; it did not rule that they were entitled to do so, 
or to acquire the interest of the mortgagee in them 
his will. It is unnecessary to determine 
in this suit whftlicr, in the peculiar circumstances 



AND PURCHASER OF EQUITY OF REDEMPTION. 201 

of this case, the former proposition is correct. LECTURE 
Their Lordships are of opinion that the latter cannot 
be supported. They think that the appellant, if 
desirous of retaining possession of these villages as 
mortgagee, is entitled to do so against the plaintiffs, 
whose right in that case is limited to the redemption 
and recovery of their village of Hosseinpore upon 
payment of so much of the sum deposited in Court 
as represents the portion of the mortgage debt 
chargeable on that village," (13 Moo. Ind. App. r 
404 ;S. C., 14 W. R.,P. C., 20.) 

You will observe that the Judicial Committee 
refused to express any opinion as to the correctness 
or otherwise of the proposition laid down by the 
S udder Dewany Adalut in the previous suit. The 
latter ruling, however, has since been followed by 
our Courts, and it certainly does not seem to be open 
to any serious objection. (4 All., 92.) A mort- 
gagee, by purchasing a portion of the mortgaged 
property, does no doubt destroy the indivisible 
character of his security to a certain extent; but it 
would be going too far to hold that the indivisibility 
of the debt was absolutely destroyed, so that any 
one of the other persons interested in the equity of 
redemption might be let in to redeem on payment of 
the proportion of the debt attributable to the por- 
tion in which he might be interested. To take a 
simple case, suppose two brothers execute a mort- 
gage of their property. If one of the brothers 

26 



202 REDEMPTION BY MORTGAGOR. 

LECTURE should die leaving three sons, and the other brother 

VI 

1. should sell his share in the mortgaged property to 
the mortgagee, I do not think any one of these sons 
could redeem his share without offering to redeem 
the shares of the other representatives of the 
deceased mortgagor. 

The foregoing observations are applicable to all 
kinds of securities. In cases of conditional sales 
governed by the Bengal Regulations, it may, how- 
ever, be doubted how far these general principles can 
be given effect to, the language of the Regulations 
being curt and applicable only to the more common 
cases. In the absence of any direct authority, I do 
not wish to hazard any opinion on the point. 

I shall now proceed to consider the method by 
which redemption may be accomplished, and I pro- 
pose, in the first instance, to state the law as it is 
administered in this Presidency. Now the mort- 
gagor may either assert his right of redemption 
actively, or he may be proceeded against by the mort- 
gagee seeking to foreclose, when the mortgagor may 
prevent a foreclosure by the repayment of the debt 
within a limited time. For reasons which are ob- 
vious, except when the mortgagee is in possession, a 
mortgagor seldom, if ever, takes any steps to redeem 
the mortgage till the mortgagee applies for foreclo- 
sure. Section 7 of Regulation XVII of 1806, however, 
applies as well to cases in which the mortgagee is 
in possession as to those in which the mortgagor 




REGULATION XVII OF 1806. 203 

has never parted with the possession of the pledge. LECTURE 
That section provides, that " when the mortgagee 
may have obtained possession of the laud on execu- 
tion of the mortgage deed, or at any time before a 
final foreclosure of the mortgage, the payment or 
established tender of the sum lent under any such 
deed of mortgage and conditional sale, or of the 
balance due, if any part of the principal amount 
shall have been discharged, or, when the mort- 
gagee may not have been put in possession of the 
mortgaged property, the payment or established 
tender of the principal sum lent with any interest 
due thereupon, shall entitle the mortgagor and ovvner 
of such property 'or his legal representative of the 
redemption of his property." Instead, however, of 
paying or tendering the money to the mortgagee, 
the debtor may deposit the money in the Dewauy 
Adalut of the zillah in which the property is 
situated. 

In the last lecture I had occasion to refer in some 
detail to the provisions of the 8th section of Regu- 
lation XVII of 1806, which relates to foreclosure. 
That very section points out the method by which a 
foreclosure may be prevented, and the redemption of 
the mortgage accomplished, by the mortgagor. 
When an application for foreclosure is made, the 
mortgagor is bound to pay to the mortgagee, or to 
deposit in theDewany Adawlut the principal, or the 
balance, if any part of the principal shall have been 



204 CONDITIONAL DEPOSIT. 

LECTTBE paid, together with interest, if possession has not 
been taken by the mortgagor. Now the tender or 
deposit, in order to be good, must be unconditional. 
It must not be made in such a way as that its 
acceptance will impose a condition upon the creditor, 
or supply evidence of an admission that no more 
is due than the amount tendered or deposited ; and I 
need hardly add, that, as it is the very essence of a 
tender that the person to whom it is made should 
be at liberty to take the money at once, a deposit 
under the Regulation, which takes the place of a 
tender, must necessarily be bad if accompanied by 
a protest that the money should not be paid away to 
the mortgagee immediately. ( Goluckmonee Debea 
v. Nobongomonjoree Debea, Suth. F. B., 14. See 
also S. D. A., 1847, p. 462; S. D. A., 1848, p. 897; 
S. D. A., 1859, p. 852.) 

A somewhat different question arises when the 
deposit, instead of being clogged with any condition, 
is merely accompanied by a protest that the money 
is not due, and that the mortgage deed is invalid. 
The question actually arose in the case of Prannath 
Cliowdhry v. Rookea Begum, which was heard in the 
last resort by the Privy Council, when their Lord- 
ships held that such a deposit is bad. In delivering 
the judgment of the Board, Lord Kingsdown said : 
* The remaining objection relates to the payment 
into Court, in the nature of a tender, which was made 
by the defendant liamruttun Roy. Ramruttim Roy 



DEPOSIT UNDER PROTEST. 205 

directed the money to be paid out to the appellant, LECTURE 
but at the same time, in his petition to the Court, 
he disputed the validity of the appellant's title to 
foreclosure, and expressed an intention, amounting 
to a notice, to sue the appellant to recover back 
the very money which he was tendering. 

" The meaning of the direction that the money 
may be paid into Court clearly is, that the 
mortgagor may have adequate and lasting evidence 
of that which is put in place of a tender, and the 
mortgagee the security and advantage of a deposit 
in acknowledgment of the title. The mortgagee 
would have little inducement to take the money, 
waiving his lien by its acceptance, if litigation on 
the very same subject were to recommence upon 
the acceptance of the money; and though mere 
words, in the form of a protest, which may accom- 
pany a tender, will not defeat, where they can reason- 
ably be regarded as idle words, their Lordships think 
that the proceedings of Ramruttun Roy with respect 
to the mortgagee's title to foreclosure forbid such 
an interpretation of his language and his act." 
(7 Moo. Ind. App., 323. See also Abdar Ruhman 
v. Kisto Lall Ghose, 6 W. R., 225.) 

I may mention that this decision has been 
criticised a good deal. But although at first sight it 
may seem to treat a tender with a threat that the 
money is not due as a conditional tender, the judg- 
ment really proceeds upon the ground that the 



206 YEAR OF GRACE 

LECTURE Indian Regulations contemplate cases in which the 

VI 

'- relation of mortgagor and mortgagee is undisputed, 
and that section 7 of Regulation XVII of 1806 was 
not intended to apply to a case in which an alleged 
mortgagor makes, under protest, a tender of money 
upon a mortgage, the validity of which he refuses 
to acknowledge. 

We now come to the time within which the 
money must be tendered or deposited. Now, the 
Regulation, as you will observe, allows one year from 
the date of the ' notification.' It is now, however, 
settled, so far at least as the Calcutta High Court is 
concerned, that the statutory period runs only 
from the date of the service, and not of the mere 
issue of the notice. This was decided in the case 
of Mohesh CJiunder Sein v. Mussamut Tarinee 
(10 W. R., 27, F. B.) The Court, however, 
refused to say from what point of time the period 
should run when the mortgagor cannot be served. 
There can, however, be little doubt, that where 
substituted service is permitted, the period would 
run from the date of such substituted service. 
I may mention that, in calculating the year of grace, 
the date on which the service is effected is excluded. 
(Mohesh Chunder Sein v. Tarinee, 10 W. R., F. B., 
27; S. C., 1 B. L. R., F. B., 14.) It would 
appear that, in the Allahabad Court, the year is still 
reckoned from the date of the issue of the notice. 
\. tihouk/iu/t Dliobce, 3 All., 301.) 



HOW RECKONED. 207 

We have seen that the mort:a2;or is at liberty LECTURE 

VI. 

either to tender the monev to the borrower, or to 

if 

deposit it in Court within the statutory period of 
one year. If, however, the Court be closed on the 
day on which the year of grace expires, a deposit 
cannot be properly made on the first day on which 
the Court reopens. In order to save the equity of 
redemption it must be made strictly within the year 
allowed by the Regulation, and the rule would seem 
to be the same as well when the Court is closed 
accidentally and unexpectedly, as when it is closed 
during an authorized vacation. In the case of 
mortgages the law allows the mortgagor an 
alternative, and if he prefer, for his own security, 
to deposit the money in the Zillah Court, he must 
avail himself of the privilege at a time when it is 
within his reach. As observed by the Court in a 
recent case : " If we were to hold otherwise, we 
should be allowing the mortgagor to extend the year 
of grace at pleasure. He might say, l If I pay 
the money to the mortgagor, I must do it within one 
year; but if I pay it into Court, I shall have 
thirteen or fourteen months.' " (Komala Kant Mytee 
v. Jtfarainee Dossee, 9 W. R., 583.) 

The class of cases of which the above is an 
illustration must be carefully distinguished from 
those in which, by an agreement between the 
mortgagor and mortgagee, the time for payment 
is extended beyond the statutory period, and owing 



208 FORFEITURE. 

LECTURE to the unexpected closing of the Court, the deposit 
'- cannot be made within the time fixed by the parties. 
This was decided in the case of Davi Rawoot v. 
Heeramon Mahatoon, in which the mortgagee having 
extended the time for repayment to the 25th of 
November 1863, on which day the Court was 
unexpectedly closed, the mortgagor deposited the 
money on the first day on which the Court 
reopened, and the question arose whether the 
deposit was made in time to save the equity of 
redemption. The Court held that the deposit was 
good, but in giving judgment the Chief Justice, Sir 
Barnes Peacock, made certain observations which 
were certainly not necessary to the decision of the 
case, and are perhaps open to criticism. The learned 
Chief Justice is reported to have said : " The day 
fixed for payment to prevent a foreclosure of the 
estate was not a day peremptorily fixed by the law, 
but a day fixed by the mortgagee himself. Now 
Courts of Equity, as a general rule, will relieve from 
forfeiture caused by not doing an act on a day fixed 
by the parties ; and I think they ought also to relieve 
when the day is fixed by law, and the act is 
prevented by some accident which the person to be 
affected by the forfeiture could not prevent, and 
which was not caused by any default or misconduct 
on his part. Courts of Equity will not allow a lessor 
to forfeit a lease, because the rent is not paid on a 
particular day." Now, although Courts of Equity 




COURTS OF EQUITY. 209 

are always willing to relieve against forfeitures LECTURE 
caused by the non-performance of an act on the day 
fixed by the parties, I do not believe that there is 
any instance of the exercise of such power when 
the time is appointed by statute. Indeed, it is 
difficult to see how such a power could be exercised 
without trenching on the province of the Legislature, 
and any argument from analogy would be simply 
misleading. Take the Statute of Limitations for 
instance : I do not think it could be contended for 
a moment that if the plaintiff was prevented by 
some unforeseen accident, without any default on 
his part, from suing in time, that a Court of Justice 
would be justified in receiving his plaint. I should, 
therefore, venture to think that where the period 
for doing the act is fixed by law, the person who 
would be affected by the non-performance must per- 
form it within the statutory period at his peril. 

There is another observation of Sir Barnes Pea- 
cock which would also seem to be open to question. 
The learned Judge says, " I should hold that the 
plaintiff has the option, either of depositing the 
money in the Judge's Court, or of tendering it ; 
and that if there is a sufficient excuse for not 
depositing it in the Judge's Court, he is not bound 
to tender the money and prove that tender." (8 
W. R., 223.) Now, although the mortgagor may not 
be bound to tender the money to the mortgagee, he 

should certain! v deposit it in Court at a time when 

27 



210 REDEMPTION. 

LECTURE it is within his reach to do so. The case may be a 

1 very hard one when the Court is closed unexpectedly, 

but the mortgagor who defers paying till the last 
moment, perhaps does not deserve much pity. 

It very frequently happens that the mortgagee, 
during the currency of the year of grace, allows an 
extended period to the mortgagor to repay the debt. 
In such cases the mortgagor must take care to 
tender or deposit the money within the limited 
period, otherwise the mortgage would be foreclosed 
at the expiration of the time. ( Goonomonee Das- 
see v. Parbutty Dassee, 10 W. R., 326.) 

I have said that the mortgagor may, without 
waiting till the mortgagee attempts to foreclose, 
take steps for the purpose of redeeming the mort- 
gage, a right which may be exercised even before 
the stipulated period. Under the Regulations the 
mortgagor may, on deposit of the principal in cases 
in which the mortgagee has been in possession, call 
upon the Court to restore the possession of the pro- 
perty to him, subject, however, to an adjustment of 
accounts between the parties. (Section 2, Regula- 
tion I of 1798.) If, however, a less sum is deposited, 
the mortgagor cannot get back into possession 
except under a decree in a regular suit, in which 
any question of right between the parties may be 
regularly brought before, and determined by, the 
Courts of Civil Justice. 

In provinces to which the Bengal Regulations do 



STATUTE OF LIMITATIONS. 211 

not apply, the mortgagor may, at any time before LECTUBE 
foreclosure and after default, bring a suit for 
redemption against the mortgagee, when the Court 
takes an account of the amount due on the mort- 
gage securitj 7 , and allows the mortgagor a certain 
period, usually six months, to pay the money. If, 
however, the mortgagor fail to pay the money within 
the appointed time, the equity of redemption is fore- 
closed precisely in the same manner as if the 
mortgagee had got a decree for foreclosure. This 
is the practice in the English Court of Chancery, 
and is followed in Bombay and Madras. In Bengal 
and the North- West the law on this point cannot 
be said to be quite settled. I shall, however, 
discuss the point at some length in the next lecture, in 
which I propose to treat of usufructuary mortgages. 
I now come to the time within which, under the 
Statute of Limitations, the right of redemption must 
be asserted. The provisions of the present law 
are substantially the same as those of Act XIV of 
1859, and I shall, therefore, confine myself to the 
later statute. Now Article 148, Schedule 2, Act IX 
of 1871, provides a period of sixty years, commenc- 
ing from the date of the mortgage, unless where 
an acknowledgment of the title of the mortgagor or 
of his right of redemption has, before the expiration 
of the prescribed period, been made in writing signed 
by the mortgagee or some person claiming under him, 
and in such case from the date of the acknowledgment. 



STATUTE OF LIMITATIONS. 

LECTTTBK In the case, however, of a purchase for value 

VI 

'- and in good faith from the mortgagee, the suit 
must be brought within twelve years from the date 
of the purchase. (As to the meaning of the words 
" purchaser for value and in good faith," see the 
case of Radhanath Dass v. Gisborne and Co., 14 
Moo. In. App., 1 ; S. C., 15 W. R., P. C., 24.) It is 
true there is no provision in Act IX of 1871 similar 
to the proviso contained in section 5 of the pre- 
vious Act, by which the mortgagor was bound to 
sue the purchaser within the time limited to a suit 
for redemption, but there can be no doubt that the 
morto-asfor will not. under the new Act, have an 

o O ' ' 

extended period against the purchaser from the 
mortgagee. The proviso in section 5 was probably 
inserted out of excessive caution. 

It is necessary to observe that the period of sixty 
years allowed to the mortgagor is wholly irrespec- 
tive of the nature of the title which the mort- 
gagee in possession may assert. The enactment 
itself is a departure from the rule that deriva- 
tive possession is inoperative for purposes of pre- 
scription ; and I know of no principle on which, the 
law being silent, we should be justified in holding 
that a derivative possessor could, by his own act, 
change the character of his possession so as to 
shorten the period of limitation. But even if there 
was any doubt upon the language of the Act, 
the fact that the period may be extended by an 



STATUTE OF LIMITATIONS. 213 

acknowledgment shows, tbat the assertion by the LECTUBE 

VI. 

mortgagee in possession of a hostile title would 
not have the effect of abridging the time fixed by the 
statute. As pointed out by Mr. Justice Hollo way in 
Tauji v. Nagamma (3 Mad., 137), the period maybe 
extended by an acknowledgment, but by no process 
can it be curtailed. I must, however, confess that 
this view is perhaps not quite consistent with cer- 
tain reported decisions of the Calcutta High Court. 
I shall only notice one of these cases, not only 
because it was decided by a very eminent Judge, 
but also because it seems to have been the first 
case in which it was laid down that the period of 
sixty years may, under certain conditions, be cur- 
tailed. In Loft Hussen v. Abdul AH (8 W. R., 476), 
Mr. Justice Dwarkanath Mitter is reported to have 
held that where more than twelve years had expired 
from the date of the expiration of the year of 
grace, the mortgagor lost his right of redemp- 
tion. It was found in the case as a fact that the 
foreclosure proceedings were regular, and the Court 
seems to have thought that the mortgagor was 
bound to assert his right of redemption within 
twelve years of the expiration of the statutory 
year of grace. I must, however, confess that I do 
not understand the reasoning by which the pro- 
position is maintained. A plea founded upon the 
statute always assumes that the plaintiff has theright 
which he claims, but that he cannot be permitted to 



214 ACKNOWLEDGMENT BY MORTGAGEE. 

LECTURE assert the right successfully in* a Court of Justice by 

VI 

'- reason of lapse of time. This being so, I do not see 
how any proceedings taken by the mortgagee for 
the purpose of foreclosure could have any other effect 
given to them than as evidence of a determination 
by the mortgagee to hold possession, not derivatively 
as pledgee, but absolutely as owner. But, as I have 
already endeavoured to explain, the assertion of a 
hostile title by the mortgagee cannot curtail the 
period of sixty years which the statute allows to 
the mortgagor to redeem his property. 

It may be suggested that the clause which allows 
a period of sixty years from the date of the mort- 
gage applies only to cases in which no particular 
period is fixed for the redemption of the property ; 
and the fact that the period on any other construc- 
tion would begin to run even before the accrual of 
the right to redeem, as also when the possession of 
the mortgagee was perfectly consistent with the 
intentions of the parties, might perhaps lend some 
support to the suggestion. But there is no authority 
for such a limited construction, and the Privy 
Council, in Luchmi Bux Roy v. Runjit Ram Panday 
(20 W. R., 375), held, that the section applies to all 
descriptions of mortgages. 

I shall now proceed to discuss the nature of the 
.'icknowledgment required to extend the period. 
N"\v. in the first place, it must be in writing and 
M- UK! by the mortgagee or some person claiming 



STATUTE OF LIMITATIONS. 215 

under him. An acknowledgment, therefore, which is LECTUKE 

VI. 

only sealed or signed, not by the mortgagee, but by an 
agent, would be insufficient. It is, however, not neces- 
sarv that the acknowledgment should be made to the 

/ cj 

mortgagor or his representative, and on this point 
our law differs from the English law on the subject. 
You will observe that, by the clause in ques- 
tion, there may be an acknowledgment of the 
title of the mortgagor or of a right to redeem. 
An acknowledgment that a certain person is the 
owner of an estate, is an acknowledgment of 
the title of that person ; while an acknowledgment 
that the mortgage is subsisting, would be an 
acknowledgment of a right to redeem which 
might be availed of by the person entitled to 
the property. It is not, therefore, necessary that 
the person entitled to the equity of redemption 
should be mentioned in the acknowledgment. This 
was decided in the recent case of Daia Chand 
v. Sarfraz (Indian Law Reports, Allahabad Series, 
117) by a Full Bench of the Allahabad High 
Court, who were of opinion that a statement in a 
record of rights made by a Settlement Officer, that 
the persons in possession were mortgagees, and 
signed by the alleged mortgagees, was sufficient to 
take the case out of the statute. The English law 
also does not require an express acknowledgment; 
and any expression referring to the estate as mort- 
gaged will be sufficient. 



216 DIFFERENCE BETWEEN THE ENGLISH STATUTES. 

LECTURE I have not been able to find any other Indian 

VI 

'- case in which the nature of the acknowledgment 
required for the purpose of enlarging the period of 
limitation has been discussed; and it may, therefore, 
I think, be useful to refer to certain English cases in 
which the question was raised. In one case it 
appears that the solicitor of the mortgagor wrote 
to the mortgagee requesting to know when he 
could see the mortgagee upon the subject of the 
mortgage, and the mortgagee in reply wrote to say, 
" I do not see the use of a meeting unless some one 

O 

is ready to pay me off." It was held by the Court 
that this was a sufficient acknowledgment in writing 
to exclude the statute. (3 DeG., Mac. & G., 620.) 
An offer by the mortgagee to purchase the equity 
of redemption has also been held to be a suffi- 
cient acknowledgment of the right to redeem; 
while in an old case, which, however, has never been 
questioned, it was held, that where the mortgagee 
described au estate in his will as his " mortgaged 

o O 

estate," there was an acknowledgment sufficient to 
take the case out of the statute. (See the cases 
cited in White and Tudor's notes to Howard v. 
Harris, pp. 886-891.) I might mention other 
cases in which the English Courts have permitted 
the mortgagor to redeem after the expiration of the 
statutory period on the basis of an acknowledg- 
ment; but the above, I think, will show how the 
Court will seize even the slightest act or expression 



AND THE INDIAN -LIMITATION ACT. 217 

of the mortgagee as an acknowledgment of the right LECTURE 
to redeem. 

I would conclude by calling your attention to a 
somewhat remarkable difference between our law 
and the English statute on which our own is cer- 
tainly modelled. Our Act speaks of an acknow- 
ledgment by the mortgagee ; but suppose there are 
two or more mortgagees, and one of them only makes 
the acknowledgment, would such an acknowledg- 
ment be sufficient to take a case out of the statute 
against both or either of them ? The English Act 
expressly provides that such an acknowledgment 
will hold good but only against the mortgagee by 
whom an acknowledgment may have been made. 
Our Act is wholly silent, although section 20 pro- 
vides that an acknowledgment by one of several 
debtors shall not have the effect of enlarging the 
period against his co-debtors. Having regard to the 
way in which our Acts are frequently drawn, it 
would not be safe to raise any inference upon the 
omission of any such clause in the article under 
consideration. The case may be merely one of 
omission. There is, however, no reported case on 
the point, and I do not think it necessary to offer 
any opinion on it one way or the other. 



28 



LECTURE VII. 

Usufructuary mortgage What constitutes usufructuary mortgages Per- 
sonal liability of mortgagor Zuripeshgee leases Difference between 
Zuripeshgee and ordinary leases Hanuman Persad Pandey's case- 
Origin of Zuripeshgee leases Rights and liabilities of usufructuary 
mortgagee before and after repeal of Usury Laws Liability to 
account Right of redemption of mortgagor Simple usufructuary 
mortgagee not entitled to decree for sale Limitation. 

A USUFRUCTUARY mortgage is a very common form 
of security in this country. The creditor is put 
into possession of the mortgaged property, the rents 
nnd profits being applied either to the discharge of 
the interest alone, or to the gradual reduction of 
both principal and interest according to the agree- 
ment of the parties. No formal words are neces- 
sary to constitute a usufructuary mortgage, although 
in this, as in other cases, inartificially drawn instru- 
ments not seldom give rise to much useless litiga- 
tion. In one case, in which a sum of money being 
advanced, the person making the advance was 
put into the receipt of the rents and profits of 
certain land belonging; to the debtor, it was con- 

O O ' 

tended that the transaction was not a mortgage, but 
a mere license to the creditor to receive the rents 
which mi-lit be revoked at any time by the debtor. 
The Court, however, held otherwise, and directed 



USUFRUCTUARY MORTGAGE. 219 

the creditor to render an account of his receipts LECTUBB 

VII. 

as mortgagee in possession, (Khusul Rai v. Jankee 
Dass, 2 Alia., 9.) 

A very familiar kind of usufructuary mortgage 
is one in which the profits are enjoyed by the cre- 
ditor in lieu of interest, the debtor being entitled 
at any time to redeem the property on payment of 
the principal. It closely resembles a Welch mort- 
gage in its incidents. Another form of usufruc- 
tuary mortgage is that in which the creditor is let 
into possession on the understanding that he is to 
enjoy the usufruct till the whole debt is gradually 
liquidated. This kind of security resembles the 
vivum vadlurn of the English law, a form of mort- 
gage which, although once common, has now fallen 
into disuse in England. The mortgagor, however, 
instead of mortgaging his whole estate, may mort- 
gage it for a term of years, and there is one kind 
of usufructuary mortgage by means of a lease, 
known as a ^uripeshgee, which forms a class by 
itself, and deserves careful consideration. I shall 
explain hereafter the origin and nature of this 
remarkable class of usufructuary mortgages which 
possesses a history of its own very interesting to 
the student of law. But before I do so, I wish 
to point out that it is not always easy to say 
whether a transaction is to be viewed as a mort- 
gage, or simply as a lease. I can only ask you to 
consult the cases on the poiut, and the only rule 



220 DIFFERENCES BETWEEN ORDINARY LEASES 

that can be safely extracted from tliem is. that the 



VII. 

' intention of the parties must be looked into, and 
that when " once you get a debt with the security 
of land for its repayment, then the arrangement is 
a mortgage by whatever name it is called." In the 
case of Masuk Amin Sazzada against Mar em Reddy 
(8 Mad., 34), where, by the terms of the arrange- 
ment, a pending suit was compromised, and the pay- 
ment of a balance ascertained to be due was secured 
by the creditor being allowed to occupy the land 
for fifty-five years at a fixed rent, of which, after 
deduction of a certain sum for the maintenance of 
the debtor, the rest was to be applied to the gradual 
reduction of the debt, which it was calculated would 
be satisfied in full in 55 years, the Court held that 
the transaction was a mortgage, and that the 
parties in providing for the gradual liquidation of 
the debt, did not intend to put an end to the rela- 
tion of debtor and creditor, and that, upon a true 
construction of the document, it created only a 
mortgage security. Now, compare the above case 
with the case of Baboo Kowar Sing v. Dullun 
Amrit Koer (S. D., 1857, p. 1232), in which there 
was a lease for twelve years, the lessee advancing 
a certain sum of money to the lessor, and it being 
provided that the lessor should be entitled to re-eu- 
on the expiration of the term, the lessee taking 
his rhance of good and bad seasons. It was argued 
that the transaction was in substance a mortgage, 



AND ZURIPESHGEE MORTGAGES. 221 

and th.it the lessee was bound to account as mort- LECTURE 

VII. 

gngee in possession. The contention, however, was 
overruled. The Court, in giving judgment, observ- 
ed : " The point to consider is, whether there was 
a fair and reasonable prospect of risk to the debt 
itself in what the banker (mortgagee) undertook; 
and, if so, no question of usury can arise out of it, 
and for the same reason the possession of the 
lessee cannot be regarded as that of a mortgagee." 

" "We think that the deed of Bhurun ijara 

before us is, in fact, an absolute sale of a lease for a 
fixed period to which the rules common to mort- 
gage transactions cannot be applied, as the extinc- 
tion of the original debt is not solely dependent on 
the receipt of adequate profits, but on profits, what- 
ever they may be, during the continuance of the 
lease. Should thev fail, the debt is neither realiz- 

*/ / 

able from, nor secured by, any other resources. 
This is no device but a substantial risk, entitling 
the lender to any benefit from the bargain." 

It is sometimes said that where the principal is 
risked, the transaction cannot be regarded as other 
than a lease. This, however, is by no means gener- 
ally true, and there may be usufructuary mortgages 
for terms of years, although the parties may ex- 
pressly covenant that the creditor shall have no 
claim against the debtor, either for principal or 
for interest, after the expiration of the prescribed 
period. It would be impossible to say that the 



922 LIABILITY OF MORTGAGOR. 

LECTURE principal was not risked in such cases, but there are 
1 several instances in our books, in which such trans- 
actions have been regarded as mortgages redeem- 
able on the usual terms. 

It would seem that in a pure usufructuary mort- 
gage, where the mortgagee takes possession of the 
estate, on the understanding that he shall repay 
himself out of the rents and profits, the mortgagor 
undertakes no personal liability, and the mortgagee 
must, therefore, look exclusively to the land for 
the repayment of the debt. In the case of Thaku 
Beebes (S. D. A., 1850, p. 44), which has since been 
followed, the Sadder Dewany of Calcutta held that, 
in the absence of any covenant, the mortgagor can- 
not be sued personally. A doubt, however, has been 
thrown upon this doctrine by the observations of 
the Privy Council in the case of Jugjewan Dass v. 
Ramdass Brijbliuhun Dass (2 Moo. Ind. App., 487; 
S. C., 6 W. K., p. 610.) In that case the mort- 
gage deed contained a clause that the mortga- 
gee should continue to enjoy and appropriate the 
annual produce till the whole debt was liquidated. 
Their Lordships observed that the mortgagee would 
have a full right to recover this debt by reason of 
the mortgage, and that the clause in question was 
merely a power for the mortgagee to satisfy himself 
just as mi English mortgagee may by taking pos- 
>i>n of the rents and profits. The case, however, 
can hardly be regarded as an authority for the pro- 



COVENANT FOR QUIET POSSESSION. 223 

position, that in every pure usufructuary mortgage, LECTURE 
the mortgagor incurs a personal obligation to repay - 
the debt. There is a distinction between an English 
mortgage, with a power reserved to the mortgagee 
to enter upon possession and satisfy himself out of 
the rents and profits, and a usufructuary mortgage 
in this country where there is no covenant by the 
mortgagor for the repayment of the loan. I have 
already had occasion to point out that in India 
there is no implied personal obligation in a mort- 
gage by conditional sale, and the same distinction 
would also seem to hold good in the case of usu- 
fructuary mortgages. I need, however, hardly point 
out that the mortgagor may expressly agree to be 
personally responsible, and it would no doubt be ex- 
tremely convenient to the mortgagee to insist 
upon such a covenant by the mortgagor. 

The mortgagor, however, is bound to deliver over 
possession of the property to the mortgagee and to 
secure his quiet possession. If, therefore, the mort- 
gagor should refuse, or be unable, to put the mort- 
gagee in possession of the mortgaged property, the 
mortgagee may sue him at once for the recovery of 
his money. (Rajah Odit Perkash Sing v. Martindell, 
4 Moo. Ind. App., 444 ; see also S. D , 1859, 
p. 118.) Again, if the mortgagee should, before the 
debt has been liquidated, be disturbed in his posses- 
sion by the mortgagor, or persons claiming under 
him, the mortgagee is not bound to bring a suit for 



224 ZURIPESHGEE LEASES. 

LTus possession, but may sue for the balance due to bim, 
and the mortgagor will be personally directed to pay 
it. (N. W. P., Vol. XI, 115 ; S. D. A., 1856, 
p. 846 ; N. W. P., Vol. VIII, 286.) 

In connection with this topic I may mention that 
the right created by a usufructuary mortgage is a 
real right, and that, although the mortgage deed may 
contain a covenant for the repayment of the money 
by the mortgagor in the event of the eviction of 
the mortgagee, the mortgagee is not bound to sue 
for the money, but may maintain ejectment, his right 
to possession as mortgagee not being inconsistent with 
his right to briiis; an action against the mortgagor. 

o *^ cj o o 

I will now proceed to treat of ztiripeshgee leases. 
A zuripeshgee lease, or a lease for a consideration, 
is in form a lease by the debtor to his creditor on 
a fixed rent reserved by the lease, which is generally 
a little over the amount of interest payable by the 
debtor. The excess is paid to the debtor, and is 
called huq haziree, the rest being retained by the 
creditor in discharge of the interest. The lease is 
generally for the term during which the loan is to 
remain out at interest, although there is usually a 
provision to the effect that, if the loan is not repaid 
on the appointed day, the lease is to continue for 
such further period as the debt may remain unpaid 
on the same conditions. Thus, suppose Ks. 10,000 
are lent at 6 per cent, repayable in five ye:u-. 
the interest on the whole sum would be PtS. COO 



THEIR ORIGIN. 225 

per annum ; the debtor gives a lease of his pro- LECTUEE 

VII 

perty for five years at a rent, say of Rs. 650 per - 
annum, the Rs. 50 representing the huq haziree, 
and the Rs. 600 the interest, which the creditor 
retains under the terms of the agreement between 
the parties. The excess, however, instead of being 
paid to the mortgagor is not unfrequently applied 
to the gradual reduction of the principal. 

I have already said that zuripeshgee leases have 
a history of their own. They were originally 
invented to evade the laws against usury, which con- 
tinued in the Indian Statute Book from 1793 down 
to a very recent period, when they were repealed by 
Act XXVIII of 1855. It is not necessary to dwell 
at any length on the usury laws, but as they moulded 
the law of securities on the principles introduced 
by the Regulations, and as cases sometimes still 
occur, in which the old law has to be applied, I think 
it necessary to draw your attention to some of the 
leading provisions on the subject. Regulation XV 
of 1793, by which the maximum rate of interest was 
limited to 12 per cent., after enacting in the 10th 
section, that all mort^asfes are to be considered as 

' O O 

virtually and in effect cancelled and redeemed, 
whenever the principal sum, with the simple in- 
terest due upon it, not exceeding 12 per cent., 
shall have been realized from the usufruct of the 
mortgaged property, provides in the next section 

for the adjustment of the accounts in the cases of 

29 



xrilll'KSIKiEEDAR 

r.r. HIRE mortgages specified in section K). " Where the 
v 1 1 

shall have had the usufruct of the mort- 



property, the mortgagee is to be required to 
deliver in the accounts of his gross receipts from the 
property mortgaged, and also of his expenditure for 
the management or preservation of it. The mort- 
gagee is to swear, or (if he be of the description of 
persons whom the Courts are empowered to exempt 
from taking oaths) to subscribe a solemn declaration, 
that the accounts which he may deliver in are true 
and authentic. The mortgagor is to be permitted 
to examine the accounts, and after hearing any 
objections he may have to offer, or any evidence 
that either party may have to adduce respecting 
them, the Court is to adjust the account." 

You will observe that these enactments rendered 
it extremely difficult for the mortgagee to realize 
more than 12 per cent, on the principal money. If 
he entered upon possession, he was liable to account 
for the rents and profits, and anything received in 
excess of the rate of interest sanctioned by the law 
was applied to the reduction of the principal. 
Mortgagees thereupon hit upon the expedient of 
entering upon possession, not as mortgagees, but as 
at a fixed rent. The lease was sometimes 
taken in the name of a third person, but the object 
in either c&M was the same, to evade the liability, 
which the Regulations imposed upon the mortgagee 
in po>se>sion. Such a transparent device was, 



LIABLE TO ACCOUNT. 227 

however, not sanctioned by our Courts of Justice, and LECTURE 

VII. 

zuripesbgee leases were regarded as mortgages, and 
tbe mortgagee was not permitted to use them as a 
shield against the claim of the mortgagor for an 

o O O 

account. The rule was not relaxed even when the 
rent reserved by the lease was shown to be a fail- 
rent. In the case of Hanuman Persad Pandey, in 
which the mortgagee insisted that he was in pos- 
session only as lessee, and was not liable to account 
for the gross proceeds, the rent reserved on the 
lease not being shown to be unfair, and it not being- 
suggested that there was any attempt to evade the 
usury laws, Lord Justice Knight Bruce, in giving 
the judgment of the Privy Council, observed : " One 
point remains to be considered, namely, whether, in 
taking the account between these parties, the defend- 
ant is to be charged as mortgagee in possession, 
with the actual rents and profits, or only with the 
rent fixed by the pottah. It is said for the appellant 
that the Sudder Dewany Adawlut did not set 
aside the pottah. In terms they certainly did not. 
But their Lordships think that it was part of one 
mortgage security, consisting of several instruments 
of equal date with the mortgage bond ; and that it 
was intended to create, not a distinct estate, but 
only a security for the mortgage money. Mr. Palmer 
contended that a stipulation, such as this pottah evi- 
dences, may stand in India between mortgagor and 
mortgagee, and that the Regulations as to interest do 



228 REDEMPTION. 

LECTURE not touch such a case. The Regulations provide for 

VII. *" 

the case of an evasion of the law as to interest by 
invalidating the mortgage security, and forfeiting 
the claim of the mortgagee to the principal and 
interest ; but Mr. Palmer contends that, where there 
is no such evasion, and a bond fide and fair rent is 
fixed upon as representing communibus annis, the 
rents and profits of the estate, the Court ought 
to stand on that agreement of the parties, and 
not to direct the taking of the accounts between 
mortgagor and mortgagee on any other basis. It is 
certainly possible that, by reason of the provision 
that the rent shall be a fixed one, notwithstanding 
losses and casualties, the mortgagee might be a 
loser, in his character of lessee, on an account cal- 
culated on this basis ; but, notwithstanding that 
contingency, their Lordships think that, as it was 
not meant that the principal should be risked, it 
was virtually a provision to exclude an account 
of the rents and profits, and that the decree of the 
Sudder Dewany Adawlut, directing an account of 
the actual rents and profits, therefore proceeds on 
the right principle, and it is in accordance with the 
true nature of the security and the spirit of the 
Regulations. 

" In the case of Roy Juswant Lall v. Sree Kishen 
Lull (14 S. D. A., 1852, p. 577) the Court seems 
to have thought that, where a mortgage lease was 
u ranted, and whilst the term was running, the 



REPEAL OF THE USURY LAWS. 229 

mortgage account could not be taken ; but it appears LECTURE 

VII. 

from that case that, in former decisions of the Court, 
not reported, where the lease had expired, the 
Court directed the account to be taken on the ordi- 
nary footing of the receipts of rents and profits 
of the mortgaged estate. Their Lordships think 
that, under the Regulations, unless the principal 
is meant to be risked, and is put in risk, the estate 
created as part of the mortgage security, whatever 
be its form or duration, can be viewed only as a 
security for a mortgage debt, and must be restored 
when the debt, interest, and costs are satisfied by 
the receipts." 

It followed, therefore, that not only could the 
mortgage be redeemed before the end of the term, 
but that the rent reserved on the lease could not 
be taken as settling beforehand the annual amount 
with which the mortgagee was to be chargeable in 
account. The arrangement might be in every res- 
pect a fair one, but our Courts, in their anxiety to 
protect the debtor from usurious contracts, refused 
to give effect to such an agreement. 

The position, however, of the usufructuary mort- 
gagee has been greatly modified by the repeal of 
the usury laws, and I shall therefore ask you care- 
fully to contrast the rights and liabilities of the 
usufructuary mortgagee as they stood before the 
repeal of the usury laws, and as they stand at the 
present day. 



2;>() EFFECT OF THE REPEAL 

URE I liave already stated that down to the year 1855, 

1 a usufructuary mortgage, whatever might be the 

terms of the contract between the parties, came to 
an end by virtue of the enactment contained in Sec- 
tion 9 of Regulation XV of 1793, as soon as the prin- 
cipal, together with interest at 12 per cent, if no lower 
rate should have been agreed upon between the par- 
ties, was realized from the usufruct of the mortgaged 
property, or otherwise liquidated by the mortgagor. 
The mortgagor, therefore, might redeem the property 
at any time, and, as in the case of conditional sales, the 
Court was bound to allow him to do so without any 
regard to the period mentioned in the mortgage. 
There might, perhaps, be good reasons for enacting 
that the mortgage should be cancelled as soon as the 
money was realized from the usufruct, but it is diffi- 
cult to see why the mortgagee should be compelled 
to be paid off by the mortgagor before the appointed 
time. There is, perhaps, no system of law which 
guards the rights of the mortgagor with greater 
jealousy than the English, and yet the Court of 
Chancery, in the absence of any fraud or improper 
dealing, will not set aside an agreement, postponing 
the equity of redemption to a long deferred day, and 
in one case, the Court refused to relieve the mort- 
^or, even though he offered to pay the whole of 
tho interest receivable by the mortgagee in advance. 

o o 

The mortgagor, therefore, under the Regulations, 
had the right to redeem at any time on payment of 



OF THE USURY LAWS. 231 

the money due, either on account of principal, or LECTUKE 

VII. 

interest, or both, and it was no answer to such a - 
suit that the term for which the mortgage had been 
granted had not expired, or that the money had not 
been realized from the usufruct. 

The position of the zuripeshgeedar, perhaps, 
deserves a closer examination. I have already 
called your attention to the light in which zuripesh- 
gee leases were always regarded by our Courts. 
They were not regarded as mere leases, and could 
not therefore be set up as a defence in an action 
by the mortgagor for possession instituted before 
the expiration of the term. It is true that the 
decisions of the Sudder Dewany Adawlut of Calcutta 
at one time showed a considerable fluctuation of 
opinion, but all the more recent authorities are in 
favor of the view that a zuripeshgee, before the 
repeal of the .usury laws, might be redeemed, even 
before the expiration of the term. (Pungun Sing v. 
Amina Khatun, 6 W. R., 6; S. D. A., 1860, p. 174; 
S. D. A., 1852, pp. 280, 304.) 

I will now discuss the nature of usufructuary 
mortgages created after the repeal of the usury 
laws. The utmost latitude is now given to the 
parties to contract in any manner they choose, and 
the restrictions, which the Regulations imposed on 
the creditor, have been wholly withdrawn. While 
the usury laws were in force, the mortgagee was 
bound to account for the gross profits, allowance 



232 RIGHTS OF MORTGAGOR AND MORTGAGEE. 

LECTURE being only made for necessary outlay and expenses 

VII 

1 of collection, and the mortgagor could not deprive 
himself of this right even by contract. Since the 
repeal, however, of those laws, the mortgagor and 
mortgagee may make any contract they please, and 
the mortgagor may by contract deprive himself of 
the right to call for an account of every farthing 
received by the mortgagee out of the estate. In 
the case of Munnoo Lall v. Reet Bhoobun Singh 
(6 W. R., 284), the Court observed : " With re- 
gard to the first part of the contention that a 
mortgagee in possession is bound in every case to 
account for the profits, and that a mortgagor can- 
not by contract deprive himself of his right, it is no 
doubt true that, while the usury laws were in force, 
a restriction in this respect did certainly exist. But 
this prohibition on the free power of the parties to 
contract as they please was solely a consequence 
of the usury laws then in force ; and on the aboli- 
tion of those laws, the restriction in question fell 
with them. By Section 4 of Act XXVIII of 1855, it 
is expressly enacted that an agreement that the use 
of usufruct of any property shall be allowed in lieu 
of interest, shall be binding upon the parties. We 
are of opinion that a mortgagor and mortgagee are 
now at liberty to make what contract they please 
with reference to the profits of the mortgaged 
estate." This case is, therefore, an authority that 
the mortgagor is at liberty to contract in any 



REDEMPTION OF ZURIPESHGEES. 233 

manner he pleases, and will not be relieved from any LECTUEB 

covenant binding him not to ask for an account of '. 

the actual profits. A zuripeshgeedar, therefore, is, as 
the law now stands, bound to account, not for the 
profits actually received by him out of the estate, but 
only for the rent reserved on the lease. 

The question has arisen whether a zuripeshgee, 
created since the repeal of the usury laws, 
may be redeemed before the expiration of the 
term specified in the deed ; and the reported cases 
on the point show the inclination of our Courts 
to treat zuripeshgees as ordinary leases, which 
cannot be put an end to before the expiration of the 
term for which they have been created. Zuripesh- 
gee leases, however, are seldom intended to create a 
distinct estate, but are only effected as security for 
the mortgage money. In this view, it would perhaps 
be difficult to treat them as ordinary leases. Be 
that, however, as it may, there is little doubt that 
a zuripeshgee, created since the repeal of the usury 
laws, cannot be redeemed before the term for which 
it has been executed has expired. (Khajeh Lootf 
AH v. Goozraz Tliakoor, 11 W. R., 428; Soorjun 
Chowdry v. Imam Bandee Begum, 12 W. R., 527.) 
It is perfectly valid as an agreement settling 
beforehand the annual amounts with which the 
mortgagee would be chargeable in account, and 
as the equity of redemption may be postponed 

to any day that the parties may agree upon, I do 

30 



234 DECREE FOR SALE. 

LECTURE not think that the Court will permit the mortgagor 
to pay off the mortgage money and re-enter upon the 
estate before the expiration of the term for which the 
zuripeshgee has been created, that being the period 
fixed for the redemption of the mortgage. It may, 
no doubt, be suggested that, in the absence of any 
express stipulation, postponing the right of redemp- 
tion, the mortgagor ought to be permitted to redeem, 
but except in very badly-drawn instruments, there 
is sufficient indication of the intention of the parties, 
that the money shall be repaid on the determina- 
tion of the term for which the zuripeshgee is effect- 
ed, and as in the case of an ordinary creditor, the' 
mortgagee has the right to refuse payment at an 
earlier date. It may, perhaps, strike some of you, 
that it is of no consequence whether you treat the 
zuripeshgee as a lease on a reserved rent, or as an 

: cement settling the basis on which the accounts 
between the parties are to be taken. This, however, 
is by no means so, and the distinction is an import- 
ant one, as I shall endeavour to show in the next 
lecture. In either view, however, a zuripeshgee is 
valid since the repeal of Regulation XV of 1793 
as an cniraucinent excluding an account of the 
actual profits realized by the mortgagee in posses- 
MOII. 

It is necessary to observe that, in the absence of 
any express contract, a zuripeshgeedar has no right 
cT to foreclose or to sell the property comprised 



STATUTE OF LIMITATIONS. 235 

in the zuripeshgee. In a recent case, the Court LECTURE 

VII 

observed : " Although it is true that these leases ' 
are treated by the Courts as usufructuary mort- 
gages, and that parties to them have to some extent 
the rights of mortgagor and morte;ao;ee, it does 

O O O DO* 

not follow that in a case of this kind the lessee is 
entitled to have the property sold. To do that 
would be to give him a greater security than he has 
stipulated for. All that has been held by the 
Courts in regard to transactions of this kind, as I 
understand it, is, that the parties ought to be con- 
sidered, not simply as lessor and lessee, but as 
mortgagor and mortgagee, the lease being granted 
as a security for repayment of the money. This 
would put the lessor in the position of a mortgagor 
and give him the rights of a mortgagor, and, to the 
extent of the security given, would put the lessee 
in the position of mortgagee with the rights and 
liabilities attached to that character. What is now 
asked for is beyond that. We think that the deci- 
sion of the lower Appellate Court is right, and 
that the plaintiff is not entitled to the decree which 
he sought in this suit." (Kewal Sahu v. Rash- 
narain Sing, 13 W. K., 446.) A zuripeshgeedar, 
to whom the property itself is not pledged, has 
therefore a very imperfect security. 

A usufructuary mortgage may be redeemed within 
the same period as any other mortgage. Before the 
passing of Act XIV of 1859, however, a usufruc- 



236 USUFRUCTUARY MORTGAGE. 

LECTUEE tuary mortgage might be redeemed at any time, but, 

VII 

1 as the law stands at present, the mortgagor must 
exercise the right of redemption within sixty years 
from the date of the mortgage, or of a written 
acknowledgment. 

There are many other points connected with 
usufructuary mortgages, which, however, I propose 
to discuss in the next lecture when I come to treat 
of accounting. 



LECTURE VIII. 

Liability of mortgagee in possession to account Regulation XV of 1793 
Meaning of " gross receipts" Mortgagee not competent to create 
middlemen Allowance for expenses of collection Practice of our 
Courts Nature of accounts which mortgagee is bound to produce 
Verification of accounts Right of mortgagee to interest not exceed- 
ing 12 per cent. Shah Makhun Loll v. SreeTiissen Sing Liability 
of mortgagee since Act XXVIII of 1855 Zuripeshgee leases 
Allowance for necessary repairs Improvements how far allowed 
Payment of Government revenue Mode of taking accounts- 
Liability of mortgagee after notice of subsequent encumbrance 
Mortgagor not liable to account Mortgagee not a trustee for mort- 
gagor Wassilat distinct from usufruct Mortgagee chargeable with 
occupation rent Suit for redemption Practice of the Courts in 
Bengal Procedure in such cases elsewhere. 

I STATED in the last lecture that the position of 
the mortgagee in possession has been considerably 
modified by the passing of Act XXVIII of 1855. It 
will, therefore, be convenient to deal in the first 
place with mortgages governed by Regulation XV 
of 1793, and then to deal with those which are 
governed by Act XXVIII of 1855. 

In mortgages created before the repeal of the 
usury laws, the mortgagee, if in possession, is bound 
to account for the gross proceeds, allowance how- 
ever being made for the " costs of collection and 
preservation of the estate in mortgage," and any 
contract excluding an account of the actual rents 



238 GROSS RECEIPTS. 

LECTUBE and profits, is, as I said in the last lecture, wholly 

' inoperative. The duty of the mortgagee is defined 

in Section 11 of Regulation XV of 1793, which 
says: "For the adjustment of the accounts, in 
the cases of mortgages specified in Section 10 
where the mortgagee shall have had the usufruct 
of the mortgaged property, the mortgagee is to 
be required to deliver in the accounts of his 
gross receipts from the property mortgaged, and 
also of his expenditure for the management or 
preservation of it. The mortgagee is to swear, 
or (if he be of the description of persons whom 
the Courts are empowered to exempt from taking 
oaths) to subscribe a solemn declaration, that the 
accounts which he may deliver in are true and 
authentic." 

Now, although the section speaks of the gross 
receipts, they must be such as the mortgagor 
himself could have realized before the mortgage. 

3 O ' 

and if he could not by reason of an intervening 
lease call for the account of the collections, neither 
can the mortgagee. The terms of the law are 
not inflexible, and must receive a construction such 
as may suffice to accommodate its provisions to 
the variable and different natures of estates and 
possession. (Shah Makhun Loll v. Sreekissen Sing, 
12 Moo. Ind. App., 157; S. C., 11 W. R., P. C., 
I 1 '.) The mortgagee, however, must not create a 
middleman between himself and the tenants, and 



ALLOWANCE FOR COLLECTION. 239 

if lie does so, he is not relieved from the responsi- LECTURE 

VIII 

bility of accounting for the gross rents payable by ' 
the tenants. (S. D. A., 1852, p. 1137; S. D. A., 1857, 
p. 1513.) 

The mortgagee, however, is not an assurer of the 
continuation of the same rate of profit as the 
mortgagor was able to raise, although he is liable 

O O ' O 

for the non-receipt of profits which he might have 
received with common care and attention. In 
taking the accounts, our Courts usually hold the 
mortgagee answerable for the rents exhibited in the 
rent-roll of the estate in the absence of any satis- 
factory explanation as to the reasons for the non- 
realization of any portion of the rents. The rule 
may, in certain cases, operate with hardship upon 
the mortgagee, but it is well calculated to prevent 
fraudulent practices. 

You will observe that the mortgagee is entitled 
to the expenses of collection, and a fixed percentage 
on the gross collections is generally allowed to 
him varying from 5 to 10 per cent. In one case, 
however, the Court observed: "No item should 
be allowed to the mortgagee which is not 
either admitted by the mortgagor, or supported 
by evidence of some sort. For instance, neither 
10 per cent, nor 5 per cent, should be allowed for 
collection charges, but only so much as the expenses 
of collection actually amounted to, and if proper 
vouchers for this are not forthcoming, at least some 



240 ACCOUNTS. 

LECTURE evidence should be adduced sufficient to lead to a 

' reasonable estimate of what the expenses under this 

head probably were." (Mukund Loll Sukul v. 
Goluk Chunder Dutt, 9 W. R., 575.) 

I need hardly observe that the accounts which the 
mortgagee is bound to deliver must be full and 
complete. They must exhibit detailed items of all 
actual receipts and disbursements, and must be 
accompanied by all vouchers. In one case in which 
the mortgagee put in certain jumma-wasil-bakee 
papers, the Court observed : " Jumma-wasil bakee 
papers, although they may, and perhaps may 
very strongly and directly, support a mortgagee's 
account put in under the law (section 3, Regula- 
tion I of 1798), are not and cannot be that 
account itself. That account which the mort- 
gagee by law has to put into Court, is not 
that of his agent or tehsildar, given by the 
latter for his master's (the mortgagee's) information 
as to such agent's collections. The jumma-wasil- 
bakee paper, however, is this latter only. The 
account to be put in under the law is one to be 
made, verified, and proved by the mortgagee him- 
self in the way before indicated. His jumma-wasil- 
bakee papers duly attested by those who prepared 
them, or who collected according to them, and 
supported by the receipts of the talookdars 
or ryots, who also may be called to depose to 
tll( ' -its and to what was the real demand, 



VERIFICATION BY MORTGAGEE. 2 11 

collection, and balance of each of their respective LECTUBB 
tenures, may well be adduced to support the mort- 
gagee's own account when made and put into Court 
under the law cited. 

" In fact, the account required from the mortgagee 
is one setting forth what he has realized, from 
what portions of the mortgaged property, in what 
terms or periods, with what loss and gain on the 
several assets, with what necessary reductions, and 
what remains then as the net profits which can be 
taken as actual realizations towards liquidating the 
sum due under the mortgaged transaction." (Mohun 
LollSukulv. Goluk Cliunder Dutt, 5 W. R., 276). 

It used to be thought at one time that the ac- 
counts must, in every case, be verified by the mort- 
gagee himself, and that the terms of the law were 
inflexible. The Privy Council, however, observed in 
a recent case : " Their Lordships think that the 
language which, like other provisions of the earlier 
Regulations, is curt and applied to the more com- 
mon cases, must, to preserve even the spirit of the 
enactment itself, be construed reasonably, as admit- 
ting in case of necessity, of some delegation, also in 
the person deputed to perform the duty of attesting 
the accounts. If the general manager who did all, 
and knows all ; with whom the mortgagors, with 
that knowledge, contracted ; whose name is used ; 
whose accounts in one sense they are ; and 

who far more than mere representatives knowing 

31 



242 DUTY OF MORTGAGEE. 

LECTURE nothing of their own knowledge of the transactions, 

VIII. 

satisfies the spirit of the law, swears to the truth of 
them, it is such a reasonable compliance with the 
spirit of the law, at least that its performance, in a 
case circumstanced like the present, by a substitute, 
furnishes no ground whatever, for suspecting mal- 
practice or designed evasion of the law ; and with 
that alone, their Lordships are concerned in this 
case, since the mere mode of the verification 
lias no other importance in this case than as it raises 
a case of suspicion against the accounts them- 
selves." (Shah Makhun Loll v. SreekisJien Sing 
12 Moo. Ind. App., 157; S. C., 11 W. R-, P. C., 25.) 
The necessity for an account, however, does not 
arise in every case. In the case of a usufructuary 
conditional sale for instance, the mortgagee is bound 
to account only when the mortgagor has deposited 
the principal, leaving the question of interest to be 
afterwards settled, or has deposited all that he 
alleges to be due, or asserts that the whole of the 
debt has been liquidated by the usufruct. (Forbes 
v. Ameerunissa, 10 Moo. Ind. App., 340.) If the 
mortgagee refuse or neglect to deliver in the 
accounts, the Court must take the best evidence 
available and decide upon it. The general presump- 
tion will, no doubt, be against the mortgagee; 
but this would not justify the Court in accepting 
without examination any evidence which may be 
ottered by the mortgagor. Presumptions in odium 



THE USURY LAWS. 243 

spnlitoris have known limits, although it may fairly LECTURB 
be doubted if those limits have not been overstepped 
in some of the cases in the books. 

I have already said that in a mortgage, created 
before the repeal of the usurv laws, the morto-a^ee 

* %/ i O O 

cannot take any higher interest than 12 per cent, on 
his money. He may, no doubt, agree to take less, 
and such agreement will be binding upon him. But 
he cannot in any case exceed the limit fixed by the 
Regulation. Cases, however, may occur in which the 
interest reserved by the mortgage will not be the 
true measure of the annual stipulated return for 
the loan. A very interesting question on this 
point arose in the case of Shah Makhun Loll v. 
Sreekissen Sing. The interest reserved by the 
instrument of mortgage was 9 per cent., but the 
mortgagor, as part of the transaction, executed a 
lease in favor of the mortgagee, which would leave 
to the mortgagee an annual profit of something 
more than 3 per cent, on the principal money. 
The mortgagee thus secured to himself a return of 
something more than 12 percent, on his money. 
The morteasror brought a suit, not for avoiding the 

tj ' ; O * O 

transaction altogether as a device to evade the laws 
against usury, bat for redemption, and contended 
that, under the Regulation, the mortgagee, while he 
could not demand more than the rate of interest 
specified in the deed of mortgage, was bound to 
account for the actual collections, and that such 



244 THE USURY LAWS. 

mi- account could not be excluded by the lease which 

' was only part of the mortgage security. The Privy 

Council, while holding that the mortgagor had a 
rio-lit to insist on the morto-as-ee's accounting for the 

Q J O O 

actual collections, were of opinion that the latter 
was entitled to have the bargain performed, so far 
as the law allowed, and that the rate of interest 
reserved by the mortgage was only a part of the 
annual stipulated return for the loan which would not 
have been granted at 9 per cent, only, the rate men- 
tioned in the deed of mortgage. In giving judg- 
ment their Lordships observed : " It is clear that if 
the morto-ao-ees had been suinsr the mortsracror on 

O o O O O 

the mortgage deed for the debt, they could have 
recovered nohigher rate of interest than 9 per cent., 
the contract being in writing and incapable of being 
varied by parol evidence ; but this is by no means 
decisive of the question, for, supposing that the 
extra profits on the several engagements forming 
one mortgage security had amounted only in the 
whole to 3 per cent., making a 12 per cent, only 
in all, precisely the same consequence would have 
ensued ; the reserved interest would have been 
correctly viewed as constituting part only of the 
profit, and as such would have been all that the 
parties stipulated for as to that part of the transac- 
tion ; but it would not have measured the stipulated 
return for the loan annually. The rules of evidence 
and the law of estoppel forbid any addition to, or 



THE USURY LAWS. 245 

variation from, deeds or written contracts. The law, LECTURE 
however, furnishes exceptions to its own salutary ' 
protections ; one of which is, when one party for 
the advancement of justice is permitted to remove 
the blind which hides the real transaction, as for 
instance in cases of fraud, illegality, and redemp- 
tion, in such cases the maxim applies that a man 
cannot both affirm and disaffirm the same transac- 
tion to show its true nature for his own relief, and 
insist on its apparent character to prejudice his 
adversary. This principle, so just and reasonable 
in itself, and often expressed in the terms that you 
cannot both approbate and reprobate the same 
transaction, has been applied by their Lordships in 
this Committee to the consideration of Indian 
appeals as one applicable also in the Courts of 
that country which are to administer justice accord- 
ing to equity and good conscience. The maxim 
is founded not so much on any positive law, as 
on the broad and universally applicable principles 
of justice. The case of Forbes v. Amerunisxa 
Begum (10 Moo. Ind. App., p. 356) furnishes 
one instance of this doctrine having been so 
applied, where it is said in the judgment of their 
Lordships : ' The respondent cannot both repu- 
diate the obligations of the lease and claim the 
benefit of it,' Unless, therefore, some positive 
law has said that, in cases similar to the present, 
the written engagement, though not extending to 



24C ZURIPESHGEE LEASES. 

LECTURE the wbole profit stipulated, must be adhered to 

VIII 

against the defendant, though the plaintiff may 
go beyond it to show the full extent of the profit, 
and so to be relieved from the consequences of 
his actual contract, their Lordships must hold 
that the bargain disclosed should be performed so 
far as the law allows ; in other words that 12 
per cent, was in this instance the interest to be 
computed." (Shah Makliun Loll v. Sreekishen Sing, 
12 Moo. Ind. App., 157; S. C., 11 W. R., P. C., 21.) 

We saw in the last lecture that, since the repeal 
of the laws against usury, a mortgagee may always 
relieve himself from the liability of accounting for 
the actual profits by an agreement with the debtor. 
The prohibition on the free power of the parties 
to contract in any manner they please has been 
withdrawn. The profits may be either taken in 
lieu of interest (Section 5), or the parties may 
agree upon a certain sum beforehand, as the 
basis on which the account between them is to be 
taken, and this brings me back to the question 
of zuripesghee leases. You will remember 
that our Courts refused to acknowledge zuripesh- 

ia as leases on a reserved rent, because they 
illicit be made the means of obtaining usuri- 

O CJ 

ous interest. That argument cannot any longer 

hold good, now that the laws against usury have 

M r< -pealed, and a mortgagee, entering into 

ion as a zuripeshgeedar, will probably be 




REPEAL OF THE USURY LAWS. 247 

now regarded, not as mortgagee in possession, but LECTUBH 
as lessee at a fixed rent. (Lee. VII.) In any point 
of view, however, the relation is so peculiar that we 
must be cautious in extending to it all the incidents 
of an ordinary tenancy. The English Court of 
Chancery, however, looks upon such transactions 
with extreme jealousy ; a jealousy which has not 
been relaxed by the repeal of the usury laws. 
u One effect," says Vice-Chancellor Stuart, " of the 
repeal of the usury laws was to bring into oper- 
ation, to a greater extent than formerly, another 
branch of the jurisdiction of the English Equity 
Courts, namely, the principle which prevented 
any oppressive bargain, or any advantage exacted 
from a man under grievous necessity, from pre- 
vailing against him." " In order," adds the learned 
Judge, " to render a contract or an agreement of 
any kind binding, there must be the assent of 
both parties to the agreement, under such circum- 
stances as to show there was no pressure, no influ- 
ence existing of a kind to make the assent an 

O 

imperfect assent, or an assent which, under other 
circumstances, would have been refused. If the 
assent to the agreement is not an assent given under 
such circumstances as that both parties are on an 
equal footing, and the agreement one perfectly free 
from any influence or pressure in the eye of this 
Court, it is not an assent sufficient to constitute 
an agreement" (Barret v. Bartly, 2 L. R , Eq., 795.) 



243 MORAL SENTIMENTS. 

LECTURE It mav, however, be suggested that such a doc- 

VIII 

' trine, unless fenced in by limitations, which would 
narrow its application only to very exceptional 
cases, is likely to introduce the very same evils which 
the Legislature intended to remove when it applied 
the sweeping brush to the usury laws in our statute 
book. Indeed the doctrine itself in its relation to 
debtors and creditors is a " survival." It is another 
illustration of the " half-conscious repulsions " 
which we feel to doctrines which we cannot deny. 
In speaking of them Sir Henry Maine says : 
" It seems to me that the half-conscious 
repulsions which men feel to doctrines which they 
do not deny, might often be examined with more 
profit than is usually supposed. They will some- 
times be found to be the reflection of an older 
order of ideas. Much of moral opinion is no doubt 
in advance of law, for it is the fruit of reli<n- 

' O 

<>iis or philosophical theories having a different 
origin from law, and not yet incorporated with 
it. But a good deal of it seems to me to preserve 
rules of conduct which, though expelled from law, 
linger in sentiment or practice. The repeal of the 
usury laws has made it lawful to take any rate of 
interest, yet the taking of usurious interest is not 
thought to be respectable, and our Courts of Equity 
have evidently great difficulty in bringing thein- 
^'Kes to ;l ,-oinplete recognition of the new prin- 
ciple." (Maine's Village Communities, p. 195.) 






ALLOWANCE FOR REPAIRS. 249 

I have dwelt at some length on the point, as there LECTUBE 

VIII. 

are indications at the present moment of a desire 
on the part of our Courts to introduce into this 
country some of the doctrines of the English 
Court of Chancery, which rest, not upon the basis 
of economical science, but upon certain vague moral 
sentiments, which lie outside the pale of positive 
law. 

We saw that since the repeal of the usury laws, 
a mortgagee may not only receive the rents and 
profits in lieu of interest, but he may also protect 
himself from accounting for the actual receipts 
by an agreement with the mortgagor. In the 
absence, however, of any such agreement, the mort- 
gagee is still bound to account for every farthing 
received by him out of the estate, and he will not 
only have to account for the rents actually realized, 
but also for such as he niio-ht have received but for 

o 

his wilful default. 

A mortgagee, however, is entitled in account to any 
outlay made by him in the preservation of the pro- 
perty, as for necessary repairs, and interest is gener- 
ally allowed on the amount of the outlay at the rate 
reserved by the mortgage. In the case of Jogendra- 
nath Mullick v. Rajnarain Palooye, Mr. Justice 
Kemp observed : " Under the law as administered 
in this country, a mortgagee in possession is in the 
position of a trustee. The mortgagee must use the 

mortgaged premises as liable to become the property 

32 



250 ALLOWANCE FOR REPAIRS. 

LECTURE of the mortgagor, and must not do anything to 
v 1 1 r 
' diminish the security upon which the money was 

lent. In this case, the mortgaged property was a 
thatched house. To allow it to fall out of repair 
and to become uninhabitable, would have been 
diminishing- the value of the security on which the 

o / 

money was advanced, and preventing the mortgagor 
from paying off the debt from the usufruct. It is 
the bounden duty of the mortgagee in possession to 
keep the premises in necessary repair, and he will 
be allowed to charge for the same with interest." 
(9 W. R., p. 488; See also 5 Bom., 114; 5 
Bom., 116.) 

You will observe that in the judgment of the 

v C3 

Court in Jogendranath Mullick v. Rajnarain 
Palooye, it is said that it is the duty of the mortgagee 
to keep the mortgaged premises in repair. This is 
no doubt true in a certain sense, but the proposition 
requires one qualification. A mortgagee is not 
bound to make any outlay, even in necessary 
repairs, except where there is a surplus left after the 
deduction of the interest from the rents. Any other 
rule would be excessively harsh to the mortgagee. 

To sum up what I have said, the right of 
the mortgagee to be reimbursed for necessary 
repairs is not co-extensive with his liability to 
;m>\ver for non-repair by which the mortgaged pre- 
mises may be diminished in value or wholly destroyed. 
The moitmmee in possession is not bound to rebuild 



ALLOWANCE FOR IMPROVEMENTS. 251 

a ruinous house, or increase his debt by laying out LECTURE 

anything beyond the rent. The property may ' 

deteriorate by lapse of time, or even owing to want 
of repair, but the mortgagee will not be held 
answerable in the absence of gross or wilful negli- 
gence. The extent to which the mortgagee may 
safely go in repairing the mortgaged estate, is thus 
laid down by Fisher in his work on mortgages, 

DO' 

and the rule has been followed in this countrv as 

/ 

founded in equity and good conscience " The 
mortgagee will be allowed for proper and necessary 
repairs to the estate, and if buildings are in- 
complete or become ruinous so as to be unfit for 
use, he may complete or pull them down and 
rebuild for the preservation of his security. And 
the rebuilding or repairing may be done in an 
improved manner and more substantially than 
before, so that the work be done providently, and 
that no new or expensive buildings be erected for 
purposes different from those for which the former- 
buildings were used, for the property when restored 
oiio-nt to be of the same nature as when the 

o 

mortgagee received it; and if it be thus wholly, 
or in part, converted from its original purposes, the 
money expended will not be allowed to be charged 
upon it." (Fisher on Mortgage, p. 887 J 

The question of improvements presents much 
greater difficulty. It would, however, seem that as 
a rule, allowance will not be made to the mortgagee 



52 SALVAGE. 

LECTURE for improvements, even of a lasting kind, unless 

VIII 

they are made with the sanction of the mortgagor, 
or are absolutely necessary for the preservation 
of the estate. The mortgagor must not be improv- 
ed out of the estate. (Sandon v. Hooper, 12 L. J. 
Ch., 309.) 

In the absence of any express contract to the 
contrary, it is the duty of the mortgagee in posses- 
sion to pay the Government revenue, and if the 
mortgagee wilfully default to pay the revenue and 
purchase the property himself, the Court will fasten 
a trust upon the purchase in favor of the mortga- 
gor. The mortgagee, who properly or improperly 
allows an estate to fall into arrear, cannot purchase 
it, so as to acquire an irredeemable interest- 
(Nawab Sid/ii Nazzir Ally Khan v. Adjudha- 
ram Khan, 10 Moo. Ind. A pp., 540 ; 5 W. 
R., P. C., 83 ; See also Raja Adjudharam Khan v. 
A.shootosh Dey, Supreme Court, 6th July, 1855, and 
Kelmll v. Freeman, Englishman, 4th September 1854.) 
Any payment, however, made by the mortgagee, 
either to prevent a forfeiture, or a sale for non- 
payment of revenue or rent, will be credited to him 
in account. \\iNurjoon Sahoov. Shall Moozeerood- 
deen (3 W. R., 26), which was a suit to redeem a 
usufructuary mortgage on payment of the princi- 
pal only, there being no stipulation for interest, 
the mortgagee in his defence insisted upon his righ 
to retain possession so Ions: as the sums which he 



SALVOR'S LIEN. 353 

had been obliged to pay as revenue, the estate liav- LECTURE 

VIII 

ing been assessed with revenue subsequently to the 
mortgage, were not repaid by the mortgagor or rea- 
lized from the rents and profits, the Court obser- 
ved : " Ordinarily the law gives to a person interested 
in land alien against the defaulting owner for sums 
of money paid by the former in discharge of the 
public revenue. The payments made by the defend- 
ant appear to us to entitle him to a lien within 
this principle. His equitable claim to such protec- 
tion is certainly not diminished in this case bv the 
fact that the plaintiff has pledged to him, as lakhe- 
raj, land which was not valid lakheraj, and has now 
been actually assessed with revenue ; nor can the 
plaintiff contend that the annual receipts from the 
land, which, when it passed into the defendant's 
hands, were clearly to be appropriated solely, to the 
defendant's use (subject to the mortgagor's right to 
an account), became subsequently bound for the 
mortgagor's benefit, although in violation of his 
express agreement to discharge his estate from the 
lien of the person who actually paid the revenue. 
This right is, we think, sufficient to qualify the other- 
wise undoubted right of the mortgagor to redeem his 
land on payment of the principal alone. If we gave 
effect to the latter right in the present suit, we 
should, in the probable event of the mortgagor re- 
quiring no accounts of the mortgagee's receipts 
while in possession, leave only to the mortgagee a 



254 MODE OF TAKING ACCOUNTS 

LECTURE doubtful remedy by suit for the money which he has 
' paid, a great portion of which would be met by 
setting up the law of limitation as a defence." 

I shall now discuss the mode of taking accounts 
against the mortgagee in possession. The gross 
collections are ascertained at the end of each year, 
and after deducting the necessary outlay on account 
of revenue, expenses of collection, and preservation 
of the estate, the balance goes to reduce either in 
. whole or in part the interest, and if. there is a 
surplus over, it goes to the reduction of the princi- 
pal ; the account being closed at the end of 
each year. In England it is not of course to direct 
annual rests against the mortgagee in possession, 
but a different rule obtains in this country. If, 
however, the mortgage debt is paid off by means of 
the rents and profits during the possession of the 
mortgagee, he will ordinarily be liable to pay 
interest on all subsequent receipts. 

The question of the liability of the mortgagee 
in possession after assignment, when it is not made 
with the assent of the mortgagor, for the rents and 
profits received by the assignee, does not seem to 
have been ever raised in this country. In England, 
the mortgagee continues to be liable on the principle 
that the mortgagee must be responsible for the 
]'<Tson to whom he assigns the mortgagor's estate. 
It may, however, be doubted whether the doctrine 
will be recognized in our Courts. 



AGAINST MORTGAGEE IN POSSESSION. 255 

The jealousy with which the Court of Chancery LECTURE 
guards the interest of the mortgagor, is well illustrat- ' 
ed by the rule invariably acted upon, that no per- 
sonal allowance is to be allowed to the mortgagee 
himself, although the salary of an agent may be 
allowed when the collections cannot conveniently 
be made otherwise. Any agreement to make an 
allowance to the mortgagee is absolutely void, and 
the repeal of the usury laws has made no change in 
this respect in the practice of the English Court of 
Chancery. 

I shall now treat of the rights and liabilities of 
the mortgagee when he allows the profits to be 
received by the mortgagor instead of entering upon 
possession himself. The rule of English law 
on the subject is thus stated by Fisher as the 
result of the authorities : " After receiving no- 
tice of a puisne mortgage, the mortgagee in 
possession becomes liable to account to the 
puisne iiicumbrancer for so much of the surplus 
rent as he has paid to the mortgagor or his re- 
presentatives ; but so long as the mortgagee in 
possession is without notice, the puisne mortga- 
gee cannot call upon him or the mortgagor for an 
account of the by-gone rents." (Fisher on Mortgage, 
p. 875.) This rule was applied to an Indian mort- 
gage in this country by the Privy Council in Jug- 
jeewan Dass v. Ram Dass. In that case, the mort- 
gage deed, after stating that the village of Mujeegum 



256 ACCOUNTING. 

LECTURE and the house at Sural should be mortgaged for 
\ in 

a certain sum, went on to say : " The profit of 

this money is settled for 12 annas, on these condi- 
tions, that the holders of the mortgage are to re- 
ceive in redemption the whole of the produce of the 
said village, about 3,000 or 3,200 rupees, and after 
allowing for interest, the remainder will go for the 
purpose of liquidating the principal, and they shall 
continue so to receive and appropriate the annual 
produce until the whole of their demand be liqui- 
dated. The risk of collecting the income, and of 
any deficiency in the revenue, is upon our heads, 
that is the mortgagor's; and we do further declare 
that the holders of the said mortgage shall station 
a melita or cleric of their own in the said village, 
for the purpose of making the collections; and we, 
the mortgagors, so long as this property remains in 
mortgage, do agree to give him a monthly salary 
of 5 rupees and his daily food so long as we 
can afford to do so." It seems that the mort- 
gagee continued in possession under this deed 
for a short time, but afterwards allowed the mortga- 
gors to receive the rents and profits. In execution 
of a decree obtained by the plaintiff against the 
mortgagors, the property was placed under attach, 
ineiit when the mortgagee for the first time had 
notice of the plaintiffs claim. In determining the 
respective rights of the parties the Privy Council 
aid: "Now the question will be, in what way the 






ACCOUNTING. 257 

mortgagee's rights are affected by this conduct; and LECTURE 
that will depend, first, upon the construction of the *' 
instrument itself. If this is a binding contract, 
binding between him and the mortgagors, bind- 
ing him to apply the rents and profits to the 
payment of the debt, he might be considered 
as having forfeited his right to payment in conse- 
quence of having allowed the mortgagors themselves 
to take possession of the rents and profits durino- 
some of the years during which his mehta was in 
possession. But their Lordships are of opinion 
that that is not the true construction of the deed, 
but that it is merely a power to satisfy himself, 
just as an English mortgagee may, by taking 
possession of the rents and profits of the estate; 
and if an English mortgagee chooses to forego 
the benefit of receiving the rents and profits, 
and permits the mortgagor to take them, it would 
have no effect as between him and the mortgagor; 
he would have a full right to recover his debt by 
reason of the mortgage. The only effect would be, 
when some subsequent incumbrancer came in, and 
he had notice of that claim. In that case the rule 
and law in England would be that if, after notice, 
he permits the mortgagor to receive the rents and 
profits, he exposes himself to the claim of the 
second incumbrancer ; and that is the principle 
which their Lordships think ought to be applied to 

the present case." (Jugjewan Dass against Ram 

33 



258 LIABILITY OF MORTGAGOR. 

LKCTCRE Dass Brijbhukun, 2 Moo. Ind. App., 487 ; S. C., 
6 WR., p. 11, P. C.) 

By the decree which was ultimately made, the 
mortgagees were postponed to the attaching cre- 
ditor in respect of the rents which might have been 
received by them, but for their allowing the mort- 
gagors to continue in possession. The rights of 
the mortgagee against the mortgagors personally 
were left untouched, and they were only permitted 
to continue in possession till the balance settled ou 
the above principle was realized. 

While on the subject of accounting, I may men- 
tion that the mortgagor in possession is not bound 
to account, although the security may be insuffi- 
cient. This is the rule of English law, and is also 
the law in this country. A mortgagor, however, 
will be liable to an action for mesue profits, if he 
withhold possession from the mortgagee in violation 
of the terms of his contract. It is scarcely necessary 
to repeat that the mortgagor is also liable for mesne 
profits from the date of the final foreclosure (i.e., 
from the expiration of the year of grace). There 
are expressions in some of the reported decisions of 
the Sudder Dewany Adawlut which might, at first 
sight, seem to countenance the notion that it was 
only from the date of the decree for foreclosure that 
the mortgagor was liable for mesne profits. I need, 
however, hardly point out to you that the rights 
of the parties, after a decree for foreclosure, arc 




POSITION OF MORTGAGEE. 259 

precisely those which they possessed at the date of LECTURE 
the expiration of the year of grace. The decree 
only declares those rights, and it must therefore 
follow, that, if there is any liability in the mortgagor 
for mesne profits, that liability must exist before 
the decree for foreclosure, and consequently nt the 
expiration of the year of grace, which is the 
dividing point of time. 

The question has arisen as to the precise position 
of a mortgagee after the mortgage debt has been 
liquidated by the usufruct. It seems to have been 
held in some cases that his position was that 
of a trustee, and that therefore no limitation 
was applicable to a suit brought by the mort- 
gagor for surplus profits. These decisions were, 
however, overruled by a Full Bench of the Calcutta 
High Court, and the period of limitation was 
held to be six years. (Baboo Lall Doss v. 
Jamal All, 9 W. R., Ib7.) This was under the 
old law. Under the new, a suit for surplus 
profits must be brought within three years of the date 
on which the mortgage comes to an end. The 
interpretation clause also tells us that a mortgagee 
is not a trustee within the meaning of the Act. 

A question of some nicety arose a few years ago 
m the High Court of Calcutta, which was ultimately 
heard by a Full Bench. In that case which was 
a suit for redemption, the principal having been 
deposited, the mortgagee was called upon to account 



260 DIFFERENCE BETWEEN USUFRUCT 

LK< TURK for moneys which he had realised by means of a 
v 1 1 1 

decree for mesne profits against the mortgagor, who 

bad evicted him. from the mortgaged premises. 
The question arose under Regulation XV of 1793, 
and it was contended for the mortgagor that the 
mortgagee was bound to account to him for the 

o ~ 

moneys which he had succeeded in realizing from 
the mortgagor in excess of the legal interest of 12 
per cent, per annum. It was, however, held by the 
Full Bench that the mortgagee was not liable to 

~ o 

account for the mesne profits. In giving judgment, 
Peacock, C. J., said : " There is a wide distinction 
between usufruct collected by a mortgagee in 
possession, and damages which are awarded to a 
mortgagee in a suit brought by him against the 
mortgagor for evicting him. We think that 
the defendants were not bound under the words 
or the spirit of Regulation XV of 1793, or 
Regulation I of 1798, to account for the wasilat 
or damages which they have received under 
the decree in the suit brought by them against the 
mortgagor for possession. If a mortgagor wrong- 
fully turns a mortgagee out of possession, it is his 
own fault, and the mortgagee is entitled to retain 
any wasilat which he may recover against the 
mortgagor, and is not bound to account for it. To 
prevent an evasion of the usury laws, the Regula- 
tion compelled the mortgagee to account for the 
usufruct ; if that exceeded interest at 12 per cent., 



AND MESNE PROFITS. 26 1 

the balance was to be accounted for. We think LKOTUBE 

VIII. 

that a Regulation of this kind must be construed 
strictly, and that we ought not so to construe it 
as to substitute wasilat recovered by a decree of 
Court for usufruct enjoyed by a mortgagee. The 
case of C 'hutter d/iaree Kowar v. Ramdoolun Kowar, 
(Sudder Decisions of 1859, p. 1181), is a case very 
much in point, though the question arose in a different 
form." (Joymungul Sing v. Sardeen, 6 W. R., 240). 

In the case of Nilkant Sen and another, the facts 
of which were somewhat peculiar, the mortgagee had 
wrongfully dispossessed the mortgagor, the mortgage 
being one by conditional sale, and not giving the mort- 
gagee power to receive the rents and profits. The 
mortgagor brought a suit for possession and mesne 
profits. He got a decree for possession, but the prayer 
for mesne profits was rejected, apparently because 
there was some technical informality in the prayer in 
the plaint. The mortgagee subsequently proceeded 
to foreclose, and when he brought a regular suit for 
possession as absolute owner, the Court held that 
he was bound to account for the profits during the 
time he was in possession, just in the same manner 
as if he had been let into possession by the 
mortgagor. It would seem, although the fact is 
not clear from the report, that a suit for mesne 
profits would have been barred. (Nilkant Sen v. 
Joynedin, 1 W. R., 30). 

A mortgagee in possession, who instead of letting 



262 PRACTICES OF OUR COURTS 

LECTUBE the land to tenants and realizing the rent in the 

VIII 

' ordinary way, cultivates it himself, is not liable to 
account for the whole of the profits arising to 
him from farming the land, but only for such profits 
as he would have received, if he had let the land 
to a tenant, and so in the case of any other profits, 
the mortgagee, if in possession, is chargeable only 
with an occupation rent. (Rughunatk Roy v. 
Oridhari Sing, 1 W. R., 244.) 

In concluding this lecture, I wish to say a few 
words on the manner in which suits for redemption 
are treated by the Courts in Bengal and the North- 
Western Provinces. The practice has been to treat a 
suit for redemption as a suit for ejectment, and to 
refuse any relief to the plaintiff, except upon proof 
that every condition necessary to the right to im- 
mediate possession, has been fulfilled. You will 
find it laid down in several cases, that, in a suit for 
redemption, the mortgagor must fail if any thing is 
due to the mortgagee on the security, and the plain- 
tiff cannot show that he had deposited or tendered 
the amount. In some instances, however, condi- 
tional decrees have been made, and in recent cases 
the Court has shown some disinclination to adhere 
to the old practice; a practice, which I venture to 
think, is attended with inconvenience as well to the 
mortgagor as to the mortgagee. It is true that 
plaints are not very artificially framed in the Mo- 

-il Courts, and they are very frequently brought 



IN SUITS FOR REDEMPTION. 263 

for recovery of possession on the allegation that LECTURE 
the mortgage debt has been satisfied. Such suits, ' 
however, are substantially brought for the pur- 
pose of ascertaining as between the parties what 
is the state of the account, a right which is ex- 
pressly given by statute to the mortgagor. We 
saw that, according to the practice of the English 
Court of Chancery (and which is followed in the other 
provinces of this country), the Court, in a suit for re- 
demption, invariably takes an account of the monies 
due to the mortgagee on his security, and if anything 
is due to the mortgagee, the mortgagor is directed 
to pay it by the time appointed by the Court, and 
on his failure to do so, tlie bill for redemption is 
dismissed; such dismissal having the same effect s and 
carrying with it the same consequences, as a decree 
for foreclosure. It would be difficult to suggest 
any reason why the same practice should not be 
followed in Bengal. According to the present prac- 
tice of our Courts, the Court is bound to take an 
account in a suit for redemption, but, even if a 
single shilling be found due to the mortgagee, the 
suit is dismissed, and, however carefully the account 
may have been taken, the finding of the Court will 
not be binding upon either party in any subsequent 
suit. This naturally leads to a perfect waste of liti- 
gation which might be easily prevented by the exer- 
cise of the power, which our Courts undoubtedly 
possess, of moulding their decrees in such a way as 




264 REDEMPTION. 

LECTURE to meet the exigencies of each case. (See the ob- 

VIII 

servations of Phear, J., in Mukund Loll Sukul v. 
Goluk Chunder Dutt, 9 W. R., 572, Compare 4 
N. W. P., 37; 5 N. W. P., 104; 6 N. W. P., 221; 
10 N. W. P., 543; S. D. A., 1849, p. 392.) The 
following recent cases may be usefully consulted 
by the student : Shah Lutafut Hossein v. Cliowdry 
Mahomed Moneim, 22 W. R., 269; Rajah Saheb 
Perladh v. Broughton, 24 W. R., 275. See also 
18 W. R., 65; 22 W. R., 172. Compare 8 W. 
R., 369; Suth. F. B., 33. 



LECTURE IX. 



Liens Legal and Judicial Distinction between Statutory liens 
Regulation VIII of 1819 and Act VIII of 1869 (B.C.) Act XI of 
1859 Salvor's lien Lien of co-sharer for revenue paid by him 
Unpaid vendor's lien Mackrcth v. Symmons What constitutes 
waiver of lien Objections to legal liens Registration Purchasers 
without notice Practice of English Court of Chancery Purchaser's 
lien Lien of partners and agents Tenants in common No lien for 
dower in Mahomedan law None in favor of creditors on assets of 
deceased debtor in Hindu or Mahomedan law Judicial lien 
Attachment before and after judgment Operation of Section 240 of 
Act VIII of 1859 Alienation by debtor not absolutely void Annnd 
Mohun Dass against Radha Mohun Shah Striking off attachment 
Effect of Puddomoney against Roy Mothuranath Ghoicdhry. 

IN the present lecture I propose to treat of liens 
or securities created by the operation of law. la 
the introductory lecture I pointed out to you the 
difference between these charges and charges 
created by the express or implied consent of the 
parties. I also stated that liens may be divided 
into two groups, legal and judicial; the one consti- 
tuting a part of substantive law, and the other, 
a part of the law of procedure. I propose to 
discuss the law relating to legal liens in the first 
place, and then to treat of judicial liens. 

I have already said that there are some cases in 

which a lien is expressly conferred by statute, while 

34 



266 SALVOR'S LIEN. 

LECTUBE there are others in which the right has been recog- 

IX 

- nised by our Courts of Justice as resting on those 
principles of equity which the Indian Courts are 
bound to administer. But though they are the 
growth of 'judicial legislation,' I need hardly point 
out they do not differ in any essential feature from 
the class of liens which I shall call statutory liens. 
The earliest instance of the latter is furnished by the 
enactment contained in the 13th section of Regu- 
lation VIII of 1819. That section says:" If the 
person or persons making such a deposit in order 
to stay the sale of the superior tenure, shall have 
already paid the whole of the rent due from him- 
self or themselves, so that the amount lodged is 
an advance from private funds, and not a disburse- 
ment on account of the said rent, such deposit 
shall not be carried to credit in, or set against, 
future demands for rent, but shall be considered 
as a loan made to the proprietor of the tenure 
preserved from sale by such means, and the taluk 
so preserved shall be the security to the person 
or persons making the advance, who shall be con- 
sidered to have a lien thereupon in the same manner 
as if the loan had been made upon mortgage ; and 
he or they shall be entitled, on applying for the 
.same, to obtain immediate possession of the tenure 
of the defaulter in order to recover the amount so 
advanced from any profits belonging thereto. If 
the defaulter shall desire to recover his tenure from 



SALVOR'S LIEN. 267 

the hands of the person or persons who by making LECTUBB 
the advance may have acquired such an interest 
therein and entered in possession in consequence, 
he shall not be entitled to do so except upon repay- 
ment of the entire sum advanced with interest at 
the rate of twelve per cent, per annum up to the 
date of possession having been given as above, or 
upon exhibiting proof in a regular suit to be insti- 
tuted for the purpose that the full amount so 
advanced, with interest, has been realized from the 
usufruct of the tenure." 

This, I need hardly point out, is a very bene- 
ficent provision. It has since been extended to 
all classes of tenants by whom the superior tenure 
may be preserved from sale. (See section 62, Act 
VIII of 1869, B.C.) 

Another provision of a similar character, but 
less ample, is to be found in section 9 of Act XI of 
1859. That section, after enacting that the revenue 
in arrear may be tendered in certain cases by a 
person who is not the proprietor of the estate, goes 
on to say : " And if the person so depositing, whose 
money shall have been credited as aforesaid, shall 
prove before a competent Civil Court that the 
deposit was made in order to protect an interest 
of the said person, which would have been endan- 
gered or damaged by the sale, he shall be entitled 
to recover the amount of the deposit, with or 
without interest as tlie Court may determine, from 



268 SALVAGE ADVANCES. 

LECTURE the defaulting proprietor. And if the party so 

TV 

1 depositing, whose money shall have been credited 

as aforesaid, shall prove before such a Court that 
the deposit was necessary in order to protect any 
lien he had on the estate or share, or part thereof, 
the amount so credited shall be added to the 
amount of the original lien." 

It is somewhat remarkable that the section does 
not, in so many words, confer a lien on every person 
by whom the estate may be saved, and apparently 
limits it only to a mortgagee making the deposit 
in order to protect his security. Advances in the 
nature of salvage, however, are recognised in every 
system of law as conferring a lien on the estate 
itself, and such advances may be made not only by 
a person having an interest in the property, but 
even by a simple creditor, although his debt is 
disputed. In the case of Nogender Chunder Ghose 
against Sreemutty Dasi, their Lordships of the 
Privy Council observed: " Considering that the 
payment of the revenue by the mortgagee will 
prevent the taluk from being sold, their Lordships 
would, if that were the sole question for their 
consideration, find it difficult to come to any other 
conclusion than that the person who had such 
an interest in the taluk as entitled him to pay the 
revenue due to the Government, and did actually 
pay it, was thereby entitled to a charge on the 
taluk, as against all persons interested therein, for 



"EQUITABLE LIENS." 269 

the amount of the money so paid." (11 Moo. Ind. LECTUBE 
App.; S. C., 8 W.R.,p. 617.) 

This doctrine rests upon the plainest principles 
of equity, and the Calcutta High Court held in a 
recent case that a co-sharer who is compelled to pay 
the revenue due from his shareholder is entitled to 
a lien on the share of the latter. (Syud Enayet 
Hossein v. Madon Mohun Shahun, 22 W. R., 411; 
See also Manik Mulla Chowdhry v. Parbutty Chum, 
S. D., 1859, p. 515.) 

The language of the ninth section of the Act 
may, perhaps, suggest a doubt as to whether or not 
the Legislature intended to confer a lien in any 
other case except where the payment is made by 
a mortgagee ; but we must remember what one of 
the sages of the English law says about law-making, 
and should not be too ready to infer that the 
express mention of one excludes all other cases. 

The lien of the co-sharer is an instance of the 
recognition by our Courts of Justice of a right not 
expressly given by any statute. This, however, is 
by no means an isolated case. In the absence of 
any specific rule, the Indian Courts are bound to 
administer the principles of equity and good con- 
science, and thus a good deal of English law has 
not unnaturally worked its way into our juris- 
prudence. 

I, therefore, propose to give a short outline of the 
liens recognised by the English Court of Chancery, 



270 LIEN OF THE UNPAID VENDOR 

LECTURE pointing out those that have been adopted in 

1 this country. Foremost among them is the lien 

of the unpaid vendor for the purchase money. It 
is thus defined by Lord Eldon in Mackreth v. Sym- 
mons: " Where the vendor conveys, without more, 
though the consideration is upon the face of the 
instrument expressed to be paid, and by a receipt 
endorsed upon the back, if it is the simple case of 
a conveyance, the money or part of it not being 
paid as between the vendor and vendee, and per- 
sons claiming as volunteers, upon the doctrine of 
this Court, which, when it is settled, has the effect 
of contract, though perhaps no actual contract has 
taken place, a lien shall prevail in the one case, 
for the whole consideration; in the other, for that 
part of the money which was not paid." (1 White 
and Tudor, L. C., p. 269.) If it were not now too 
late to do so, I should venture to protest against the 
introduction of this doctrine into our system, if on 
no other account, at least on account of the number 
of refined distinctions which have clustered round 
it in the English law, and which must inevitably be 
introduced with it. In order to explain myself I 
ought to state that, in the English law, a vendor may 
waive his lien either expressly or by implication, 
and the circumstances which will be sufficient to 
raise an inference of waiver have given rise to a cloud 
of distinctions which are extremely refined, and 
which have produced a degree of uncertainty such 



FOR PURCHASE MONEY. 271 

as led Lord Eldon to say, " that it would have LECTUBE 

IX 

been better at once to have held, that the lien - 
should exist in no case, and the vendor should 
suffer the consequences of his want of caution; or 
to have laid down the rule the other way so dis- 
tinctly, that a purchaser might be able to know, 
without the judgment of a Court, in what cases it 
would not exist. " It has been held in England 
that the lien exists even when the money is secured 
to be paid at a future day ( Winter v. Lord Anson, 
3 Russ., 488), while the mere taking of a security 
does not amount to an abandonment of the lien. 
If, however, the vendor take a totally distinct and 
independent security, it will then become a case of 
substitution for the lien. The question, however, 
in all these cases is simply whether or not the cir- 
cumstances show a clear and unequivocal intention 
to give up the lien a question on which there 
must necessarily be a great conflict of opinion. It is, 
therefore, to be regretted that the doctrine should 
have worked its way into our law. It rests upon 
grounds altogether different from those on which the 
lien of the salvor has been recognised. In the case of 
the vendor of land it is always open to him to protect 
himself against the consequences of the fraud or in- 
solvency of the purchaser, and if he does not choose 
to take the most ordinary precautions he hardly 
deserves much sympathy. I need scarcely point out 
that the case of a person who is obliged to make a 



272 "EQUITABLE DEFENCE." 

LECTURE payment for the protection of bis own interests, is 
essentially different. But there is another and a 
still more serious objection, which applies to all legal 
liens alike. They are neither agreements, nor 
declarations, and are therefore wholly untouched by 
the Registration Acts. They, however, confer real 
rights, and a bondjide purchaser for value may be 
easily misled. This is a serious evil. We know 
how it is guarded against in England. The right 
being merely " equitable," the English Court of 
Chancery, acting upon a well-known doctrine, will 
not suffer it to be enforced against a bond fide pur- 
chaser for value without notice of the lien. The 
doctrine itself is a curious illustration of the way in 
which the rights and obligations of parties have 
been gradually moulded by equity. We saw that 
in archaic law it was not easy to make a secret 
transfer of land. The transaction must be attended 
with a number of solemnities which served to give 
it publicity, and the omission of any one of them was 
fatal to the validity of the transfer. It is hardly 
necessary to observe that a rigid adherence to the 
doctrine was likely to lead to considerable hardship, 
and the Court of Chancery, therefore, allowed in cer- 
tain cases the same relief as if the plaintiff had ac- 
quired a real right, notwithstanding his inability to 
make out a complete legal title. But, in order to 
jin-vent injustice to third persons, equity allowed a 
peculiar defence to a purchaser for value who may 



HYPOTHEC BOOKS. 273 

have been misled by the presumable want of publi- LECTUEB 

IX 

city. As a fact, in modern times, a conveyance - 
does not necessarily carry with it greater publicity 
than a contract, but the old doctrine still remains as 
a " survival." 

In countries in which this peculiar defence is not 
admitted, the same object is accomplished by the 
hypothec books in which all transfers of real rights 
are carefully entered. In the French Code, for 
instance, the registration of legal mortgages is as 
compulsory as the registration of conventional 
securities. But the Indian statute does not permit 
the registration of such transactions. This fact of 
itself ought to induce our Courts to be cautious in 
the admission of legal liens. If, however, we adopt 
the law as administered by the English Court of 
Chancery on this subject, the equitable defence 
open to a purchaser for value should also be admit- 
ted. So long as the registration of legal mortgages 
is not rendered compulsory, any other course must 
necessarily lead to very great hardship. It may, no 
doubt, be said that it would be inconsistent with the 
logic of the law to hold that a real right may not 
be enforced against a subsequent purchaser; but, as 
observed by an eminent jurist, logical antinomy is 
more easily to be borne than a rule which fails to 
do justice between man and man. 

I shall now treat of some other liens recognised 

by the English law. A lien arises in favor of a 

35 



274 CIVIL LAW. 

LECTUHB purchaser for purchase money prematurely paid by 

IX 

'- him. There is also a lien in favor of partners on 

the partnership estate, on dissolution, in satisfac- 
tion of any demands arising out of the partnership 
business. An agent also is, in certain cases, protect- 
ed by a lien on property on which he has made 
advances on account of his principal. As a general 
rule, however, a person is not entitled to a charge 
simply because he has laid out money on the pro- 
perty of another. I am not sure whether, according 
to English law, one of the tenants-in-common of a 
house is entitled to a lien for money laid out in 
necessary repairs. The question does not seem to 
have been ever raised in this country, but I venture 
to think that the person who lays out money in 
repairing a house to which he is entitled in common 
with others, has a much stronger equity in his favor 
than the unpaid vendor. In this country properties 
are frequently held in coparcenary, and although 
the remedy may, in one sense, be said to be in their 
own hands, we all know, a partition cannot be made 
without great delay and expense to the parties. 

The principles of justice, equity, and good con- 
science, however, so long as they do not harden into 
S\>K in. arc often extremely vague. They should, 
therefore, be applied with very great caution. 
Various liens, for instance, are recognised by the 
Civil law and the Continental Codes, which find 
no place in the English system. The lien of the 



MAHOMEDAN LAW. 275 

lender who advances money for the purchase of land, 



or for repairing a building, or of the architect or 
laborer employed in the construction of any works, 
is not recognised by the English Court of Chancery; 
and yet it would be difficult to deny that the 
creditor in the one case, and the architect in tho 
other, have at least as strong an " equity " in their 
favor as the unpaid vendor. The truth is, the 
principles of justice, equity, and good conscience 
are at best but an uncertain guide, and not unfre- 
quently wear an appearance of vagueness, which, it 
must be confessed, is rather bewildering; to the 

7 c5 

student of Indian law. Indeed, it may fairly be 
doubted whether our Courts ought not to confine the 
right to a legal mortgage only to those cases in 
which, as in the case of the salvor, the person 
claiming the right could not have protected himself 
by an express agreement. In every other case the 
parties may be safely left to take the consequences 
of their own want of caution. 

I shall now treat of one or two cases in which it 
is sometimes thought that a lien exists. It is some- 
times said that a Mahomedan widow has a lien on 
the estate of her husband for dower due to her. 
The question was very fully discussed in the case of 
Mir Meher All v. Afussamut Amanee, and the Court, 
after a review of all the authorities, came to the con- 
clusion that the widow has no special charge on the 
property, but ranks pari passu with other ordinary 



276 N0 LIEN ON ASSETS 

LECTUKE creditors. (11 W. R., p 212, see also Shah 

IX 

- Enayet Hossain v. Syud Romzan, 10 W. R., 216.) 
But dower, like every other debt, must be paid 
before the heirs are entitled to take anything, and 
the authorities show that a Mahomedan widow in 
possession of her husband's estate upon a claim of 
dower, has a lien upon it as against those entitled as 
heirs, and is entitled to the rents and profits till 
the claim of dower is satisfied. (See Macnaugh ten's 
Precedents, case 24, p. 275, Womatul Fatlma v. 
Mirunnissa, 9 W. R., p. 318, reported also in 
8 W. R., 51.) 

A similar right is sometimes put forward on 
behalf of the creditor of a deceased Hindu, but it is 
now conclusively settled that a creditor has no lien 
on the assets in the hands of the heir, and cannot, 
therefore, reach any property which may have been 
transferred by the heir in good faith to a third party. 
Sir Thomas Strange, indeed, in his book on Hindu 
law, says, that "debts are a charge on the inheritance, 
and that they follow the assets into whatsoever 
hands it comes." (Strange's Hindu Law, Vol. I, 
p. 166.) And the learned author cites the very high 
authority of Colebrooke in support of his opinion. 
(Strange's Hindu Law, App., p. 282.) There is also 
the text of Katyayana: " If any debts exist against 
the father, his son shall not take possession of his 
effects. They must be given to his creditors." 
(Stokes Yubahnra Mayukha, p. 122.) Our Courts, 




OP A DECEASED HINDU. 277 

however, have laid down a different doctrine, LECTURE 

IX 

although it may fairly be doubted if this is not one '- 
of the many instances in which English lawyers 
have unconsciously introduced the doctrines of their 
own law, moulded by the commercial necessities of 
of the country, into a system comparatively archaic, 
and not shaped by such economic considerations. 
The Sudder Dewany Adawlut, presided over by 
Judges not so familiar with English law, adhered to 
the doctrine laid down by Strange and Colebrooke. 
But the law has been differently interpreted in 
recent decisions. In the case of Zuburdust Khan 
v. Inderman (Agra, F. B., 71 ), the Court, in giving 
judgment, observed: " In our judgment the real 
test to be applied in deciding the issue of law raised 
is to be found in the answer to the question to 
whom does the property pass on the death of 
the deceased ? Does it pass immediately and 
entirely to his heirs, or is the normal devolution 
interrupted, so that the whole or a portion of the 
estate sufficient to discharge his debts, vests, as if by 
hypothecation, in the creditors, and does only the 
residue pass to the heir? 

" We can find no authority for the latter proposi- 
tion; nor has any other text been cited in support 
of it than that from Katyayana referred to by the 
Division Bench. Although Sir T. Strange enumer- 
ates debts among the charges on the inheritance, 
he nowhere expresses himself to the effect, that any 



278 HINDU LAW. 

LECTURE interest in the inheritance vests in the creditor; on 

IX 

_ll the contrary, the language used by him rather 
shows that the whole estate of the deceased's ances- 
tor passes to his heirs, affecting them with a liability 
for the debts of the ancestor to the extent of the 
assets received by them. The heirs may, if they 
please, avoid this liability by disclaiming the estate, 
but into the hands of whatever volunteer it comes, 
the liability attaches on him; and so long as the 
estate remains in the hands of the heirs or any 
other volunteers, so long does it constitute a fund, 
to which the creditor is entitled to have resort for 
satisfaction of his claim. This is, in our opinion, the 
correct interpretation of the dictum that ' debts 
follow the assets into whatsoever hands they come.' 
We have examined the authorities referred to by 
Sir T. Strange on this point, and can find nothing in 
them which warrants any stronger position in favor 
of creditors than that which we have expressed 
above. The text of Katyayana may, at first sight, 
seem to justify the contention that the whole estate 
of a deceased ancestor does not pass directly to the 
heirs; but. that there rests in them only the resi- 
due after satisfaction of the debts. But this text 
must be read in connection with other texts of 
writers of hi^li authority on Ilindu law; and so 
reading it, we are of opinion, that the proper cons- 
truction of it is to hold, that it declares that the 
resulting benefit to the heirs from the succession 



JUDICIAL LIENS. 279 

cannot be greater than the surplus of assets over LECTURE 

IX 

liabilities; not that the estate does not altogether '- 
and absolutely vest in the heirs. Numerous texts 
may be referred to which indicate a power in the 
heirs to deal with the whole estate before satisfac- 
tion of the debts. The very fact that they may 
sell it to satisfy debts shows an ability to make a 
good title to the whole of it. 

"The construction of the text of Katya} r ana in the 
sense contended for on behalf of the appellant is 
therefore untenable." (See also Annopurna Dassee 
v. Gunganarain Pal, 2 W R., p. 296 ; compare N. 
W. P, 1859, p. 23 ; Mad., S. D. A., Vol. I, p. 166.) 

It would seem that although a Hindu widow has, 
in a certain sense, a lien on the estate of her 
deceased husband for maintenance, the charge can- 
not be enforced against a purchaser for value with- 
out notice of the lien. At any rate the widow 
cannot seek to charge the estate in the hands of a 
purchaser without showing that there is no property 
of her deceased husband in the hands of his heirs. 
(AdJdranee Narain Kumaree v. Shona Malee, 1 I. L. 
R. Calc., 365; see also 8 B. L. R., 225; 9 B. L. R., 
11 ; compare 2 Agra, 42; 4 Moo. Ind. App., 246; 
1 AIL, 191.) 

I now come to judicial liens or attachments. 
Now an attachment under the Procedure Code 
may be either before or after judgment; the process 
being intended in both cases to guard against the 



280 JUDICIAL LIENS. 

LECTURE alienation of the property by the defendant. It 
i \ 
'- would be beyond the range of the present lectures 

to discuss all the various points in connection with 
attachments. I shall confine myself only to the 
operation of an attachment under the Code. An 
attachment operates from the moment that the pro- 
cess is executed as a charge on the property, the 
judgment itself not having the effect of creating in 
this country a lien on the property of the judgment- 
debtor. But, in order to have the benefit of an 
attachment, the provisions of the Procedure Code 
must be carefully followed. In one case in which 
the notice of attachment was not fixed up in the 
Court-house, or in the office of the Collector, the 
Court thought that an alienation made by the 
debtor could not be avoided by the creditor. Mr. 
Justice Macpherson in giving judgment observed : 
" The objection is by no means a technical 
objection. The affixing the notice in the Court- 
house and in the office of the Collector is a far 
more certain means of giving information to the 
parties immediately interested, than in the process 
of reading the notice aloud on the laud or on some 
place adjacent to it. A man can always arrange 
so as to keep himself acquainted with all notices 
fixed up in the Court of the Judge or the Collector 
of a district. But there can be no certainty that he 
will happen to hear, or to be made acquainted with, 
orders which are merely read aloud on his land 



ALIENATION. 281 

or on some place adjacent to it. In the case before LECTUBH 

IX 

us, it is not proved that the judgment-debtor was 
in personal possession of the lands which were the 
subject of attachment, and there is nothing what- 
ever to show or to lead to the presumption that he 
was acquainted with the fact of the order of attach- 
ment having been read aloud by the peon who was 
sent to attach the property. The probability of 
the judgment-debtors having known that the attach- 
ment had been issued, would have been far strong- 
er if the order had been fixed up in the Court- 
house or in the office of the Collector. 

" Section 240 savs that alienations after attach- 

j 

ment are to be void, if the attachment or the 
written order ' shall have been duly intimated and 
made known in manner aforesaid.' The words 
'manner aforesaid' relate to the provisions of 
Section 239, and when two out of the three 
methods prescribed by that Section for intimating 
and making known attachments have been wholly 
omitted, it cannot possibly be said that the order 
of attachment was duly intimated and made known 
within the meaning of Section 240." (Inderchund 
Baboo v. The Agra Bank, 10 W. R., 264.) 

An attachment before judgment is not, according 
to the view taken by a Full Bench of the Calcutta 
High Court, an attachment which would entitle the 
creditor to preference in an order for distribution. 

The scope and object of an attachment before judg- 

36 



282 RIGHTS OF ATTACHING CREDITOR. 

LECTURE ment are merely to guard against the debtors 
- making away with the property pending the suit. 
It does not secure to the creditor priority, if any 
question should arise as between rival decree-holders 
as to the distribution of the sale proceeds of the 
attached property. (Sreeram Manik v. Tincowree 
Roy, 13 W R., F.B., p. 9.) An attachment before 
judgment, therefore, confers only a somewhat pre- 
carious right. An attachment after judgment and 
in execution is, however, a perfect real secu- 
rity. The judgment-debtor may not alienate the 
property, the purchaser under the execution follow- 
ing upon such attachment not being bound by 
a transfer made by the debtor subsequently to the 
attachment. What passes to the purchaser is, there- 
fore, not the rights and interests of the debtor as they 
stand at the time of the sale, but the rights and 
interests of the debtor as they stood at the time of the 
attachment. Section 240 of the Procedure Code has, 
however, received a somewhat limited construction, 
the Privy Council, in the case of Anund Mohun Dass 
against Jullodhur Shah, having held that a private 
alienation is void only as respects the attaching cre- 
ditor and those who claim under or through the 
attachment. (14 Moo. Ind. Ap., 543; S. C., 17 W. R., 
313.) The construction suggested by one of the 
learned Judges in the Court below would have given 
the creditors of the debtor an ampler remedy, but 
thu point has been settled otherwise by the highest 



ATTACHMENT. 283 

Court of Appeal. It must, however, be borne in LECTURE 
mind that an attachment does, to a certain extent, 
enure to the benefit of all the judgment-creditors. 
Thus, suppose A attaches property belonging to his 
judgment-debtor worth 5,000 rupees, and that the 
debt due to A is only 1,000 rupees. Now, if the 
debtor should sell the property to a third person 
before it has been attached by any other creditor, and 
the property should eventually be sold under an 
execution, the balance of the purchase money will 
not be paid over to the purchaser, but will be dis- 
tributed amons; such of the other creditors as mav 

o / 

have taken out execution prior to the order for 
distribution. (Sections 270 and 271, Act VIII of 
1859.) 

In conclusion, it is necessary to observe that if an 
attachment has been permanently struck off, and a 
new attachment has become necessary, a conveyance 
which is executed between the two attachments will 
be valid. (Govindo Sing v. Mir Mushun All, S. D. A., 
1855, page 244.) A question of much greater difficulty 
arises when the conveyance has been executed while 
the first attachment was subsisting. Does such a 
conveyance become valid by relation, or is it void 
against the execution-creditor and those claiming 
under him. In the case of Puddomoney against Roy 
Muthooranath Chowdry, the Privy Council observ- 
ed : " It seems to their Lordships that generally 
where the party prosecuting the decree is compelled 



284 ATTACHMENT. 

LICTCBI to take out another execution, his title should be 
'- presumed to date from the second attachment. 
Their Lordships do not mean to lay down broadly 
that, in all cases in which an execution is struck off 
the file, such consequences must follow. The 
reported cases sufficiently show that in India the 
striking an execution proceeding off the file is an 
act which may admit of different interpretations 
according to the circumstances under which it is 
done, and accordingly their Lordshipy dp not desire 
to lay down any general rule which would govern 
all cases of that kind ; but they are of opinion that 
when, as in this case, a very long time has elapsed 
between the original execution and the date at 
which it was struck off. it should be presumed that 
the execution was abandoned and ceased to be 
operative, unless the circumstances are otherwise 
explained." (20 W. R., 133.) 



LECTURE X. 

Subrogation Application of rule Rights of puisne incumbrancers 
Rights of surety Entitled to benefit of securities held by creditor 
How far discharged by relinquishment of security Security nofr 
relinquished by payment Rule of English law Followed in India 
Co-debtors How far entitled to benefit of securities Purchasers of 
mortgagor's rights redeeming a mortgage, how far entitled to benefit 
of subrogation Other cases illustrative of the rule Contribution- 
Principle on which founded Doctrine followed in India Marshalling 
of securities Rule of English law Adopted by our Courts Distinc- 
tion between purchasers and incumbrancers Notice immaterial in 
the case of a mortgage. 

IN the last lecture I treated of the various circum- 
stances under which a lien is created by the opera- 
tion of law, independently of the assent of the 
parties between whom the relation is created. Li 
the present lecture I propose to discuss a class of 
securities which, although distinguishable from the 
class considered in the last lecture, have yet some 
features in common with them. I refer to cases 
in which a person, by whom an incumbrance is dis- 
charged, is sometimes allowed to stand in the place 
of the mortoaoree, and to avail himself of the securitv 

O O ' ^ 

in precisely the same way as if the mortgagee had 
assigned it to him. 

The doctrine of subrogation, as it is called, rests 
upon the plainest principles of justice and equity, 



286 RIGHTS OF SURETIES. 

LECTURE and is recognized in almost every system of law. 
2 
1 You must not, however, suppose that every person 

who discharges the mortgage debt is entitled to 
the benefit of the security held by the mortgagee. 
As a rule, in the absence of an assignment of the 
security, the person by whom the debt is discharged 
lias no right to avail himself of it. The discharge 
of the debt extinguishes the security, and the 
doctrine of subrogation or involuntary assignment 
is an exception to this rule. 

We have seen that every person who is entitled 
to redeem acquires, on redemption, the right to stand 
in the place of the mortgagee, and that it is not 
necessary that he should obtain an actual assign- 
ment of the mortgage in order that he may avail 
himself of the security. (Bhekun Sing v. Din Doyal, 
24 W. R., 47.) But there are other cases also in 
which the discharge of a debt secured by a mort- 
gage is followed by the same result. A surety 
who pays the debt due from his principal is entitled 
to enforce any security against the debtor possessed 
by the creditor. " A surety, " to use the language 
of Sir S. Romilly, in his argument in Crayihorne 
v. Swinburne, " will be entitled to every remedy 
which the creditor has against the principal debtor; 
to enforce every security and all means of payment; 
to stand in the place of the creditor, not only through 
the medium of contract, but even by means of 
securities entered into without the knowlcd^ 



RIGHTS OF SURETIES. 287 

the surety; having a right to have those securities LECTURE 
transferred to him, though there was no stipulation 
for that ; and to avail himself of all those securi- 
ties against the debtor." In a recent case in the 
Calcutta High Court, the question arose whether 
or not a surety, by whom the debt had been paid, 
could proceed against the original debtor upon 
the instrument itself by which the debt had been 
created. The facts were shortly these : The plain- 
tiff brought a suit in the nature of an action 
of ejectment upon a mortgage, which had been 
regularly foreclosed. The defence was that, prior 
to the mortgage under which the plaintiff made 
title to the property, the debtor had borrowed 
money from a third person on the security of that 
very property, and that the defendant was his 
surety on that occasion. The money not having 
been repaid by the principal debtor, the 
defendant paid the debt, and the creditor, at 
his instance, brought an action against the debt- 
or on the mortgage bond; and in execution of 
the decree obtained by him, the property in dis- 
pute was sold and purchased by the defendant. 
In this state of facts it was contended for the 
plaintiff that the payment by the surety discharged 
the debt, and consequently extinguished the secu- 
rity ; and that the defendant under his purchase 
acquired only the rights and interests of the 
debtor as in an ordinary execution, and that, 



288 PAYMENT BY SURETY 

LECTURE as the plaintiff's mortgage was prior in date to the 
'- defendant's purchase, the facts stated in the defence 
were no answer to the plaintiff's suit. This con- 
tention was, however, overruled by the Court, and 
Mr. Justice Mark by, in giving the judgment of the 
Court, said: "We must decide the question by 
analogy of the law of other countries ; and it appears 
to us clear, that, by the law of England and the law of 
Scotland, and, as far as we are aware, by the general 
la\v of Europe, when a surety has paid off the debt 
of his principal, not only all the collateral securities 
are transferred to the surety, but, by what is called 
subrogation, the right is also transferred to him to 
stand in the place of the original creditor, and to 
use against the principal debtor every remedy 
which the principal creditor himself could have 
used. It seems to us, therefore, that the law of 
this country may be reasonably taken to be that 
which has been considered equitable in other 
countries, namely, that the surety is not debarred 
from proceeding against the original debtor upon 
the instrument itself which created the debt, by 
reason of the debt having been paid by himself." 
( //1'i-ra Latt Samunt v. Syud Oozeer All, 21 W. li., 
347.) 

The English law on the subject is contained in 
the -Mercantile Law Amendment Act, 1856 (19 & 20 
\ i<-t., c. 97), which provides, that " every person 
who being surety for the debt or duty of another, 




DOES NOT EXTINGUISH SECURITY. 289 

or being liable with another for any debt or duty, LECTUBK 
shall pay such debt or perform such duty, shall 
be entitled to have assigned to him. or to a 
trustee for him, every judgment, specialty, or 
other security which shall be held by the creditor 
in respect of such debt or duty, whether such 
judgment, specialty, or other security shall or shall 
not be deemed at law to have been satisfied by the 
payment of the debt or performance of the duty ; 
and such person shall be entitled to stand in the 
place of the creditor, and to use all the remedies, 
and, if need be, and upon a proper indemnity, to use 
the name of the creditor, in any action or other 
proceeding at law or equity, in order to obtain 
from the principal debtor, or any co-security, co- 
contractor, or co-debtor, as the case may be, 
indemnification for the advances made and loss 
sustained by the person, who shall have so paid such 
debt or performed such duty; and such payment 
or performance so made by such surety shall not 
be pleadable in bar of any such action or other 
proceeding by him." 

The surety being entitled to use against the 
principal debtor every remedy which the creditor 
himself could have used, it follows that, if the 
principal creditor improperly deals with the 
securities or relinquishes them, the surety will be 
discharged. This is the law in England, and has 

been followed in this country. (Narain Govuid 

37 



290 ANALOGY RETWEKN SURETIES 

LECTURE v. Gunesh Attaram, 1 Bom., 118.) Whether the 
x 

surety will be absolutely discharged or exoner- 
ated only to the extent of the value of the 
securities relinquished by the creditor, is a question 
which admits of some doubt, and cannot perhaps 
be said to be yet settled. 

You will observe that the English Statute, follow- 
ing in this respect the law of other countries, 
allows to the surety, not only the benefit of any 
security possessed by the creditor, but^ also the 
benefit of any judgment which may be hold by the 
creditor. The same right is extended to one of 
several debtors who may have been obliged to pay 
the whole of the debt due to the creditor. The 
co-debtor has the same equity as the surety, and 
ought in justice to have the same facilities for 
reimbursement. It is true that the question has 
not been directly raised in any case in this country, 
except where one of several mortgagors redeems a 
usufructuary mortgage, when it has been held that 
he is entitled to retain possession of the whole estate 
till the mortgage- debt is discharged by the rents 

o *n O / 

and profits. It would be, however, difficult to suggest 
any reason why the same principle should not be 
extended to other cases, in which one of several 
joint debtors pays the whole debt, such debt being 
secured by a mortgage. It is true, if the mortgage 
is one by way of conditional sale, difficulties may 
arise in the way of the enforcement of it as against 



AND CO-DEBTOftS. 201 

the other debtors; but there is no reason why the LECTUEK 
payment should not be regarded as a charge on the 
property in the nature of a simple mortgage. 
There are some expressions in the judgment of the 
Court in Degumburee Dabee v. Eshan Chimder Sen 
(9 W. R., 230), which would at first sight seem to 
show that a co-debtor cannot have the benefit of any 
securities held by the creditor; but the point really 
decided in the case was, that a co-debtor purchasing 
a judgment against himself and the other debtors, 
had no right to issue execution on the judgment 
for the purpose of recovering the whole amount 
from the other debtors. It is, however, unfortu- 
nate that the Court should have rested their judg- 
ment in great measure upon the English case of 
Dowbiggin v. Bourne (2 Young and Collyer, 462), 
which followed Copis v. Middleton (Turner and 
Russell, 231), in which a somewhat refined distinction 
was taken between securities that were merged by 
the judgment, and those that were available to the 
surety notwithstanding the judgment. The rule, 
however, laid down in those cases was considered 
to be unsatisfactory; and, as we have already seen, 
the English Legislature has since passed an Act 
for the purpose of giving increased facilities to 
sureties and co-debtors for reimbursement. 

I have already said that, as the law stands at 
present, one of several joint debtors cannot 
have the benefit of any judgment held by the 



292 SUBROGATION. 

LECTURE creditor. The procedure of our Courts in 
x 

- matters of execution is ill adapted to the deter- 
mination of the various questions which must 
necessarily arise in sucli cases; but, as I have 
already pointed out, it does not, by an) 7 means, 
follow that the debtor will not be permitted to avail 
himself of any securities held by the creditor, and 
which the creditor might have enforced against the 
debtor. 

There are several other cases in which the law 
allows a person who discharges an incumbrance to 
stand in the place of the mortgagee. A purchaser 
of the debtor's equity of redemption, who pays off 
incumbrances on the purchased property in order 
to acquire a safe title, may, under certain circum- 
stances, use such iucumbrances as a shield against 
the claims of a subsequent iucumbrancer who may 
not have been paid oft'. (Syud Ajid Hossein v. ttajiz 
Anted Reza, 17 W. R., 480.) The question, how- 
ever, is not entirely free from difficulty, and I reserve 
a fuller discussion of it for the next lecture. 
Many other instances of subrogation will also be 
found in the books. Thus, in the case of Syud 
Mohamed Skamsal Ilasla v. Skewulc Rum, which 
was a suit by a reversioner to avoid a conveyance by 
a Hindu widow, it appearing that there was a valid 
mortgage upon the property for a certain sum 
which had been redeemed by inoiiry paid into 
Court by the defendant, the Court refused to make 



CONTRIBUTION. 293 

a decree for the plaintiff, except on the condition LECTUK* 

T 

that the plaintiff should pay to the defendant the 
amount of the mortgage which had heen redeemed 
by him. (14 W. R., 315; S. C. on appeal, 22 W. 11., 
409.) An analogue rule is followed when a con- 
veyance is set aside, the Court frequently directing 
that the conveyance should stand as a security for 
the amount actually advanced to the plaintiff, or 
applied to his benefit. 

I now come to the subject of contribution. This 
involves the determination of the proportions in 
which two or more owners of an estate, subject to a 
common charge, ought to contribute to its redemp- 
tion, or what is the same question under another 
aspect, the extent of the right which one of such 
persons, who has been compelled to discharge the 
common debt, has to be reimbursed by the others. 
This is only a branch of the general law of contri- 
bution, and rests on the plainest principles of justice 
and equity. Any other rule would leave it open to 
the creditor to select his own victim, and from 
caprice or favoritism, what ought to be a "common 
burden," might be turned into " a gross personal 
oppression." We have already seen that a mortgage 
debt is one and indivisible, and if several distinct 
parcels of land are hypothecated to the creditor, and 
subsequently pass to different purchasers, the credi- 
tor may proceed against any one of those parcels; 
and the only way to prevent a sale of it would be 



204 APPORTIONMENT 

LECTURE to tender to him the whole of the mortgage debt. 
-1 It is but reasonable that, in such a case, the person 
who is compelled to discharge a common burden, 
should be permitted to seek indemnification from 
the other purchasers, and no fairer rule can be 
suggested than that each of the purchasers should 
contribute according to the value of the property 
purchased by him. This was laid down by the 
Calcutta High Court in the case of Bhoyrub 
Cliunder Moduk v. Nadear C/iand Pal (12 W. R., 
291). It would be manifestly unjust to allow a 
mere accident to cast upon a particular portion of the 
land, and, therefore, upon the owner of that portion, 
a burden which was originally imposed, and which 
ought iu fairness, notwithstanding the proceedings 
of the creditor, to be laid equally on the whole, and, 
therefore, on all the purchasers; and, as I have 
already said, no proportion can be suggested which 
is so equitable as that of the respective values at 
the date of the severance. 

It would seem, although the point was not directly 
before the Court, that no personal liability is incur- 
red by the defendant, the plaintiff being only 
entitled to a charge on the portion purchased by 
the person from whom he seeks to be reimbursed. 
You will find the law similarly laid down by Story 
in his Equity Jurisprudence: " Cases may be easilv 
stated where apportionment of a common charge, 
or, more properly speak ing, where contribution 






AND CONTRIBUTION. 295 

towards a common charge, seems indispensable for LECTURB 
tlie purposes of justice, and accordingly has been - 
declared by the common law in the nature of an 
apportionment towards the discharge of a common 
burden. Thus, if a man owning several acres of 
land is bound in a judgment or statute, or recogni- 
zance, operating as a lien on the land, and after- 
wards he alienes one acre to A, another to B, and 
another to C, &c. ; there, if one alienee is compelled, 
in order to save his land, to pay the judgment, 
statute, or recognizance, he will be entitled to con- 
tribution from the other alienees. The same 
principle will apply in the like case, where land 
descends to parceners who make partition, and 
then one is compelled to pay the whole charge ; 
contribution will lie against the other parceners. 
The same doctrine will apply to co-feoffees of the 
land, or of different parts of the land." ( 477.) 
And again in 484 the learned author says: 
" Let us suppose a case where different parcels of 
land are included in the same mortgage, and these 
different parcels are afterwards sold to different 
purchasers, each holding in fee and severalty the 
parcel sold to himself. In such case, each pur- 
chaser is bound to contribute to the discharge of the 
common burden or charge, in proportion to the 
value which his parcel bears to the whole included 
in the mortgage." ( Story's Equity Jurisprudence.) 
A somewhat curious case on the point is to be 



296 MARSHALLING 

LKCTUHE found in the books: Jeetram Dutt v. Durga Dass 
Cliutterjee (22 W. R., 430.) It appears that the 
creditor, who had a charge in the nature of a simple 
mortgage on two properties belonging to two differ- 
ent persons, levied the whole of the debt from one 
of the debtors. The person who was obliged to 
repay the whole of the debt brought a suit for 
contribution against his co-debtors, and, in execution 
of the decree obtained by him, seized the property 
which had belonged to his co-debtor, and which 
formed a portion of the land on which the debt due 
to the principal creditor was secured. The creditor, 
who had in the meantime purchased the property, 
asked that the attachment might be withdrawn, and 
on the dismissal of the application deposited in 
Court under protest the money due to the judg- 
ment-creditor, which was subsequently paid aw r ay to 
him. He then brought a suit for the money which 
he had been obliged to pay under protest, but the 
Court was of opinion that he was not entitled to 
recover back the money, apparently because the judg- 
ment-creditor had a lien on the land which formed 
u portion of the property on which the debt was 
originally secured ; and that he was entitled, " iu 
respect of the security given for the original debt, 
to stand in the- same position as the creditor whose 
claim on that security had been satisfied/ 1 

I now come to the doctrine of marshalling of 
securities, which is intimately connected with the 




OF SECURITIES. 297 

right of subrogation, which I have already consi- LECTUBB 

Y 

dered. Whenever a person has a lien on two proper- _ 
ties, and another a charge only on one of such 
properties, the Court will compel the mortgagee 
whose debt is secured on two properties, to take his 
satisfaction in the first instance out of the estate 
not in mortgage to the other, provided that his 
rights are not in any way prejudiced, or his remedies 
improperly controlled. The very same result is 
accomplished in some systems, by allowing the 
mortgagee who has a mortgage only upon one 
estate to stand in the place of the other mortgagee, 
if the latter shall have taken his satisfaction out 
of that estate. 

The doctrine of marshalling rests upon the prin- 
ciple, that a person having two funds to resort to 
should not be permitted from wantonness or caprice 
to disappoint another who has only one fund to go 
upon. If, therefore, the person with a claim upon 
two funds elects to proceed against that to which 
alone the right of the other is limited, the latter 
will be allowed to stand in the place of the former, 
and to satisfy his demand out of the other fund. 

The result of the English and American authori- 
ties on the subject is thus stated by Story in his 
Equity Jurisprudence : 

" The general principle is that where one party has 
a lien on or interest in two funds for a debt, and 

another party has a lien or an interest in one only of 

38 



298 MARSHALLING 

LECTURE the funds for another debt, the latter has a right in 
x. 
- equity to compel the former to resort to the other 

fund in the first instance for satisfaction, if that 
course is necessary for the satisfaction of the claims 
of both parties, whenever it does not trench upon 
the rights or operate to the prejudice of the party 
entitled to the double fund." 

" If A has a mortgage upon two different estates 
for the same debt, and B has a mortgage upon only 
one of the estates for another debt, B has a right to 
throw A in the first instance for satisfaction upon 
the security which he, B, cannot touch, at least 
where it will not prejudice A's rights or improperly 
control his remedies." ( 633, 642, 643.) 

I need hardly point out that, ordinarily, a subse- 
quent purchaser of one of the estates has just as 
strong a claim as a mortgagee. There is, however, 
this difference between the position of a purchaser 
and that of an incumbrancer. In the case of a 
purchaser, if the purchase was made with know- 
ledge of the mortgage, there is no reason why, as 
between the purchaser and the mortgagor, the 
burden should be thrown in the first instance on 
the mortgagor; although, as I have already endea- 
voured to explain, the person who is compelled to 
pay the whole would be entitled to bring an action 
for contribution. A morteao-ee, however, stands 

O O 7 

upon ;i different footing. He has a right to enforri- 
tin- ]>:i\ mcnt of his debt, and whether the mortg;mv 



OF SECU1UT1KS. 

to him was or was not with notice of the prior LECH-UK 
incumbrance, the mortgagor cannot complain with 
reason of any facility which may be offered to the 
second mortgagee by compelling the prior mortgagee 
to resort, in the first instance, to the estate which 
is not the subject of mortgage to the puisne incum- 
brancer. The case, in fact, is analogous to the 
familiar case of a mortgagor redeeming the first 
mortgagee. Such redemption enures to the benefit 
of the puisne mortgagee, and the mortgagor will 
not be permitted to say to him " you shall satisfy 
yourself only out of the equity of redemption on 
which alone the debt was secured." The point 
is a very important one, and must be carefully 
borne in mind. In some of the earlier English 
cases, you will find it laid down that marshalling 
could not be insisted upon by an incumbrancer 
with notice of the prior mortgage. (Lanoy v. Duke 
of Athol, 2 Atk., 4446.) The rule, however, was 
considered too narrow, and the distinction has since 
been abolished. (Gibson v. Seagrim, 20 Beav., 614; 
Tidd v. Lister, 10 Hare, 157.) 

The doctrine of marshalling has been adopted 
by our own Courts as a rule founded in equity and 
good conscience, although it may perhaps be 
doubted if the reservations by which the doctrine is 
qualified have been sufficiently attended to in 
some of the reported cases on the subject. 

In the case of Mussamut Nowa Koer v. Sheikh 



300 MARSHALLING 

LECTURE Abdui Rohim (Sutherland, 1864, p. 374) one of 
j 

1 the estates in mortgage having been sold under an 
execution levied by an ordinary creditor, the 
purchaser under the execution resisted the attempt 
of the mortgagee to enforce his security against 
the property which had been purchased by him, 
without in the first instance proceeding against the 
properties which still belonged to the mortgagor. 
The defence was allowed, and the Court, in giving 
judgment, observed : " The sale (i.e., the execution 
sale) does not release that estate from the mort- 
gage, but it forces the plaintiff to take measures 
in the first place to recover the amount due to 
him from the remaining estates included in his 
mortgage deed. If any balance remains after he 
has realized all which he can realize from these 
two remaining estates, he can then return to the 
third estate to recover the balance. No injustice 
is done to the plaintiff by requiring him to take 
satisfaction out of funds which are within his 
power for this purpose, and so placed by the deed; 
while, on the other hand, very great injustice 
might be done to other parties by allowing plaintiff 
to proceed against the estate which has been already 
sold." 

It is probable, although the fact does not appear 
from the report, that the purchaser bought without 
notice of the mortgage, and paid, not for the equity 
of redemption, but for an absolute interest in the 



OF SECURITIES. 301 

property. Even in that case, however, it is LECTURE 
extremely doubtful, as I have already explained, if 
the purchaser under the execution could set up 
the defence of a bond Jide purchase for value and 
without notice of the incumbrance. 

There are other cases also in the books in which 
securities have been marshalled, and which you 
may usefully consult. (Tulsi Ram v. Munu Lall, 
I W. R., 353; consider Bissnnath Mookerjee v. 
Kisto Mo/tun Mookerjee, 1 W. R., 483; Khetoosee 
Cliurria v. Bany Madhub Dass, 12 W. R., 114.) 



LECTURE XI. 

Pledge of moveables Paucity of authority Contract Act Definition 
of pledge Validity of hypothecation of moveables Danger of 
fraud Distinction between a pledge and a mortgage of chattels- 
Power of sale Pawnee's lien extends to interest and necessary 
expenses Extraordinary expenses Right of pawnee to tack sub- 
sequent advances Rule of English law Right of pawnee to make 
use of pledge Degree of diligence imposed on pawnee Differences 
between Indian law and English and Roman law on the point 
Pawnor's right to accessions Right of redemption Passes to the 
legal representative Possessory heirs 'General and special Unpaid 
seller's lien May be varied Right of resales Differences between 
Indian and English law Lien of artificers Banker's and attorney's 
lien for general balance of account. 

I NOW propose to treat of pledges of moveable 
property. This class of securities is, by no menus, 
unimportant, although, in a country like India, 
the wealth of which mainly consists in agriculture, 
they are not so common as in commercial countries. 
It is for this reason that there are so few cases on 
the subject in the books. Pledges, however, occupy 
a distinct chapter in the Contract Act; and, although 
it cannot be said that the Legislature has dealt with 
every point in connection with the subject, it has 
certainly removed a good deal of that obscurity 
which must necessarily cluster round such a topic 
in the absence of well-defined rules. 



HYPOTHECATION OF MOVEABLES. 303 

A pledge is defined in the Act to be the " bail- LECTUBB 
meut of goods for the payment of a debt, or per- 
formance of a promise." But, although the bailment 
itself is called a pledge, the bailor and bailee are 
severally called pawnor and pawnee, a change of 
phraseology for which it is somewhat difficult to 
account. 

You will have observed from the definition of a 
pledge, that it must be accompanied by a delivery 
of possession. The Act is silent on the subject of 
the hypothecation of moveables. I told you in the 
introductory lecture that, in most modern systems of 
law, the hypothecation of moveabies is, either not 
permitted at all, or is fenced in by a multitude of 
rules which are absolutely necessary for the 
prevention of fraud. We do not purchase land 
without examining the title-deeds, but moveables 
are daily transferred from one person to another^ 
simply on the faith of the vendor's possession ; and 
one of the most difficult problems which modern 
legislation has to solve is the reconciliation of the 

O 

interests of commerce with the prevention of fraud- 
ulent transfers of moveables by persons in posses- 
sion of them. It is, therefore, to be regretted, that 
the Contract Act is silent on the subject of hypo- 
thecation of moveables. We must not, however, 
infer from the silence of the Legislature that such 
transactions are invalid in this country, or that they 
may not be enforced against bond Jide purchasers 



304 BONA FIDE PURCHASERS FOE VALUE. 

LECTUBB without notice. In the case of Deans v. Richardson 
(3 All., 54), the Allahabad High Court affirmed 
the validity of a mortgage of moveable property, 
although unaccompanied by delivery of possession. 
In giving judgment, the Court observed, "Now, 
without o-oino; at length into the numerous English 

o o o o 

authorities cited by the learned counsel in the 
course of their arguments, we may lay it down as 
the result of the latest rulings, that, by the common 
law of England, where goods are mortgaged and 
left in the possession of the original owner, the 
circumstance that they are so left is not to be held 
as a fraud ' per se' rendering the mortgage liable 
to be defeated as between the mortgagee and third 
parties, such as bond fide purchasers or judgment- 
creditors ; but when possession is left with the 
morti'-a^or, this is a circumstance which warrants the 

O O ' 

Court in leaving it to the jury to determine whether 
or not the mortgage was fraudulent and colourable, or 
otherwise. We are not aware that any difference 
prevails between the law on this point, which has 
heretofore been accepted in this country, and the 
English common law. When recently the proposed 
Code of Contract Law was discussed in this coun- 
try, the provision which the Indian Law Com- 
missioners proposed for the security of bond fide 
purchasers of chattels from persons in possession 
was not only denounced as at variance with the 
received practice of the Courts, but as uudesir- 



HYPOTHECATION OF MOVEABLES. 305 

able in this country. We do not feel at liberty LECTURE 

XI 

to hold that the rule which has heretofore been 
accepted is so inequitable that we are at liberty 
to disregard it in our judgment. The circum- 
stances of each case should be closely scanned; 
and, where it is shown that the original dealing 

7 O O 

is bond fide, it should be supported, notwithstand- 
ing there has been no delivery. In the present 
case no fraud other than alleged legal fraud and 
laches is imputed to the Bank. It is not denied 
that the advance was made and the security bar- 
gained for, it is only urged that the Bank should 
have taken possession at least when failure occurred 
in payment of the loan. The Bank was not, in our 
judgment, bound to take possession immediately after 
default was made. The machines were the means 
whereby the debtor earned moneys ; and it may, 
therefore, have been imagined that, in course of time, 
the debtor would be in a position to discharge his 
debts if indulgence were shown him. The Court, 
after considering the arguments urged, finds that the 
property in suit passed to the auction-purchaser, 
subject to the lien created in favour of the Bank ; 
and a decree will issue accordingly in favour of the 
Bank." 

This doctrine was adhered to in the subsequent 
case of Shijam Surder v CheytaloU, and the pledgee 
was allowed to enforce his security against a pur- 
chaser without notice. (3 All., 71.) 

39 



306 POWER OF SALE. 

LECTURE It may here be necessary to notice the distinction 
between a mortgage and a pledge of chattels. A 
mortgage, although it is subject to a condition, passes 
the whole title to the creditor, but a pledge passes 
only what English lawyers call a special property. 
"A mortgage is a pledge and more; for it is an 
absolute pledge to become an absolute interest, if 
not redeemed at a certain time. A pledge is a 
deposit of personal effects, not to be taken back 
but on payment of a certain sum, by express stipula- 
tion or the course of trade to be a lien upon them." 
(Jones v. Smith, 2 Ves. Jun., 378.) The mortga- 
gor of chattels may, therefore, be allowed to retain 
possession till default, but such a proceeding is open 
to the same objections as a hypothecation. 

To return. If the pawnor make default, the pawnee 
may sell the pledge of his own authority and without 
judicial process. But he is bound to give previous 
notice of the sale to the pawnor. The pawnee may 
also, at his option, bring an action against the 
pawnor, and retain the goods pledged to him as 
collateral security. The lien of the pawnee 
extends not only to the principal debt, but also to the 
interest and any necessary outlay in the preserva- 
tion or custody of the pledge. The language of 
the law, however, leaves us in some uncertainty 
whether the right of the pawnee to interest and 
necessary expenses is confined to a bare right of 
detention, or whether he is entitled to retain the 



POWER OF SALE. 307 

amount out of the proceeds of the pledge. The LECTUBE 
Legislature could hardly have intended to confer 
the somewhat precarious right of a bare lien in 
Such cases. But it is unfortunate that it has 
expressed itself in language which is certainly open 
to misconstruction. 

It is hardly necessary to observe that the pawnee 
may obtain a sale of the pledge through judicial 
process, and having regard to the jealousy with 
which a private sale is regarded, and the possibility 
of further litigation, a sale through the intervention 
of a Court of Justice would certainly seem to be 
desirable in ordinary cases. In commercial trans- 
actions, however, this is not always either practicable 
or convenient; but the pawnee, as a fiduciary vendor, 
is bound to attend to the interests of the pawnor, 
and an improper sale will certainly be set aside as 
an abuse of the duty cast upon him. Again, you 
must remember that there is not the same danger 
of fraud in the sale of chattels as there is in 
the sale of land. Moveables may be appraised with 
sufficient accuracy for all practical purposes, but 
the case is very different with landed property. 
Besides, the exigencies of commerce mav absolutelv 

O tf ** 

require, in many cases, a prompt sale of goods; but 
I need hardly point out that the analogy cannot be 
safely extended to land. I have, however, dwelt at 
length on the subject in a preceding lecture, and 
if I recur to it, it is only to point out that a power 



308 RIGHT OF TACKING. 

LECTURE of sale, which may be safely given to a pawnee, may 

XI 

- yet be denied to a mortgagee of imnioveable pro- 
perty. 

I omitted to mention that extraordinary expenses 
for the preservation of the pledge, expenses which 
could not have been foreseen, may be recovered by 
the pawnee from the pawnor. There is, however, 
this distinction between expenses of this class and 
necessary expenses. In the case of necessary 
expenses, the law authorizes the pawnee to retain the 
pledge till he is reimbursed ; while in the case of 
extraordinary charges, the pawnee has a right of 
action against the pawnor for the outlay, and it is 
extremely doubtful if he can add it to the amount 
of his lien. One learned commentator, indeed, says, 
that the pawnee has only a lien for necessary 
expenses, and that the law does not confer on him 
any right to be reimbursed by the pawnor over 
and above the right of lien. Such a right, however, 
I venture to think, may fairly be presumed. (See the 
observations of Peacock, C.J., in Ambica Devi v. 
Pranhuri Dass, 12 W. R., F. B., 1 ; S. C., 4 B. L. R., 
F. B., 77.) In the absence of any contract to that 
effect, the pawnee may not detain the pledge for any 
other debt than that for which the goods were 
pawned to him. The right of tacking, however, is 
recognized to a limited extent, the Court being 
bound to presume, in the absence of any evidence 
to the contrary, that subsecpicMit advances made to 



SUBSEQUENT ADVANCES. 309 

the pawnor were made on the security of the LECTURE 

XI 

pledge, and the pawnor is not entitled to redeem, 
except on condition of repaying the original debt, 
together with the subsequent advances. It would 
seem that this qualified right of tacking may be 
enforced, not only against the pawnor, but also 
against creditors and purchasers. The rule of the 
English and American law on the point is thus 
stated by Mr. Justice Story in his Equity Jurispru- 
dence, 1034: " A subsequent advance made by a 
mortgagee or a pledgee of chattels would attach 
by tacking to the property in favour of such mort- 
gagee, when a like tacking might not be allowed 
in cases of real estate. Thus, for instance, in the 
case of a mortgage of real estate, the mortgagee 
cannot, as we have seen, compel the mortgagor, 
upon an application to redeem, to pay any debts 
subsequently contracted by him with, or advances 
made to him by, the mortgagee, unless such new 
debts or advances are distinctly agreed to be made 
upon the security of the mortgaged property. But 
in the case of a mortgage or pledge of chattels, 
the general rule, or at least the general presump- 
tion, seems the other way. For it has been held, 
that, in such a case, without any distinct proof of 
any contract for that purpose, the pledge may be 
held until the subsequent debt or advance is paid, 
as well as the original debt. The ground of this 
distinction is, that he who seeks equity must do 



310 RIGHT OF PAWNEE TO USE THE PLEDGE. 

LECTURE equity; and the plaintiff, seeking the assistance of 
the Court, ought to pay all the moneys due to the 
creditor, as it is natural to presume that the pledgee 
would not have lent the new sum but upon the 
credit of the pledge which lie had in his hands 
before. The presumption may, indeed, be rebutted 
by circumstances; but, unless it is rebutted, it will 
generally, in favour of the lien, stand for verity 
against the pledgor himself, although not against 
his creditors or against subsequent purchasers." 

A pawnee may not ordinarily use the goods 
pledged to him without the consent of the pawnor; 
such consent, however, will be presumed, if the 
pledge is such that it cannot be duly preserved 
without being used. A horse, for instance, must be 
exercised, and the pawnee may ride it for that pur- 
pose. If, however, the pledge is of such a nature, 
that it will be the worse for use, as wearing apparel 
for instance, the pawnee may not use it himself. If 
the use is indifferent, a moderate use is not prohi- 
bited; but in no case should the pledge be exposed 
to extraordinary peril. 

On this subject the Contract Act says: "If the 
bailee makes any use of the goods bailed, which is 
not according to the conditions of the bailment, 
he is liable to make compensation to the bailor for 
any damage arising to the goods from or during 
such use of them." (Section 154.) But the fore- 
iu; rules which have been adopted in other 



ACCESSIONS TO THE PLEDGE. 31 

systems of law may be taken to sufficiently illus- 
trate the conditions under which a pledge may or 
may not be used by the pawnee. 

I will next call your attention to the degree of 
diligence imposed by the law on the pawnee. Sec- 
tion 151 says:" In all cases of bailment, the bailee 
is bound to take as much care of the goods bailed 
to him as a man of ordinary prudence would, 
under similar circumstances, take of his own goods of 
the same bulk, quality and value as the goods bailed." 
This is a very simple rule unincumbered by the 
somewhat refined, if not fanciful, distinctions which 
we find in the Roman and English law. (See the case 
of Coggs v. Bernard, and the notes to that case in 
Smith, L. C., p. 177.) It is, however, necessary to 
observe, that the responsibility of the pawnee is 
greatly increased when he is in " mora,'' i.e., when 
he wrongfully withholds the pledge from the pawnor. 
He then becomes answerable for any loss, destruc- 
tion or deterioration from the time of such refusal. 
(Section 161.) 

I told you in a previous lecture that, as a rule, any 
accession to the pledge, or natural increase, is consi- 
dered to be itself pledged. A different rule would, 
however, seem to be laid down in the Contract Act. 
Section 163 of which says: "In the absence of 
any contract to the contrary, the bailee is bound to 
deliver to the bailor, or according to his directions, 
any increase or profit which may have accrued from 



312 POSSESSORY LIENS. 

LECTURE the <roods bailed." It is. however, probable that all 

XI 

'- that the Legislature intended to enact was, that the 
property, in the accession or increase, should belong 
to the pawnor and not to the pawnee, although the 
latter might claim the same qualified right in the 
increase as in the original pledge. I need hardly 
say that, in the absence of any authority, I cannot 
but speak with some reserve. 

The pawnor may redeem the pledge at any time 
before it is actually sold, provided that he asserts 
his claim within thirty years from the date of the 
pawn, or of a written acknowledgment by the pawnee. 
(Act IX of 1871, S. 2, Art. 147.) Any agreement 
by which the right of redemption was sought to be 
fettered, would, as in the case of a mortgage of land, 
be absolutely void; and the pawnor would be let in 
to redeem, notwithstanding the agreement. If the 
pawnee should die before redemption, the right may 
be enforced against his representatives. The right 
to redeem is, however, not confined to the pawnor 
during his life, but may be asserted by his legal 
representatives. 

I shall conclude this lecture with a few words on 
possessory liens a very imperfect class of securities 
when confined to a bare right of detention without 
the iiK.'ans of obtaining material satisfaction. The 
Contract Act, following the English law on the sub- 
I' <-t. divides liens into two classes general and spe- 
<-i;.l. A special lien authorizes the holder of the 



GENERAL AND SPECIAL LIENS. .;].; 

goods to retain them only till the particular debt L... -n ui. 
in respect of the goods is paid. But a general lien 
extends to any balance which may be due from the 
owner to the holder of the goods. By section 93 
of the Contract Act, the seller has a lien on the 
goods sold by him for the unpaid price so long as 
they remain in his possession. As in the case of 
land, however, the lien may be waived, and the taking 
of a collateral security will probably raise the infer- 
ence that the lien was intended to be abandoned. 
I need hardly point out that, where the goods are 
sold on credit, the seller has ordinarily no lien ; but 
the insolvency of the buyer before delivery will 
give the seller the right to retain the goods. The 
same result follows if the period for which credit 
is given is allowed to expire, and the goods are 
suffered to remain in the possession of the seller. 
(Sections 95 97.) As for the right of stoppage 
in transilu, see sections 99 106. 

According to the English law, as I have already 
explained, a possessory lien is only of value as a 
means of compelling satisfaction. It does not confer 
a right of sale. (Thames Iron Works Co. v. Patent 
Derricks, 29 L. J., Chan., 714.) Section 107 of the 
Contract Act, however, contains an important im- 
provement. It says : " Where the buyer of goods 
fails to perform his part of the contract, either by 
not taking the goods sold to him, or by not paying 

for them, the seller, having a lien on the goods or 

40 



314 POWER OF SALE. 

LECTUBB having stopped them in transit, may, after giving 

^-1 notice to the buyer of his intention to do so, resell 

them after the lapse of a reasonable time, and the 

buyer must bear any loss, but is not entitled to 

any profit, which may occur on such resale." 

There are other descriptions of liens, however, 
which are not accompanied by a power of sale. 
The lien, for instance, allowed to a person for labor 
bestowed on goods bailed to him is confined to a 
bare right of detention. Bankers, factors, and 
others, who possess a general lien, are also in the 
same position. (Sections 170 and 171.) They can, 
no doubt, put a pressure on the will of the debtor, 
but they may not, in any case, sell the pledge. 



LECTURE XII. 

Extinction of securities Consolidation Merger of debt Right of prior 
mortgagee how far extinguished Rule of Roman law Doctrine of 
English Court of Chancery Conflicting decisions in India Extinc- 
tion of security by discharge of obligation Novation Substitution- 
ary and cumulative Extinction of security by destruction or sale of 
pledge or prescription and renunciation Priority Generally deter- 
mined by order of time How affected by registration Notice 
immaterial Priority how far affected by possession Rule of Hindu 
law Privileged liens Salvor's lien Tacking Extent to which 
recognised in Roman law Doctrine of English law Origin of 
doctrine Not followed in India Consolidation of securities Rule of 
English law Partial recognition by our Courts Mortgage to secure 
future advances How priority is forfeited Fraud, actual or con- 
structive, of mortgagee Laches Effect of allowing title-deeds to 
remain in custody of mortgagor Allowing mortgagor to receive 
rents after notice of incumbrance Deeds of further charge 
Practice in India Waiver of security not presumed IAS pendens 
Application of doctrine in relation to priority of securities. 

I PROPOSE to discuss in the present lecture the 
various methods by which a security is extinguished. 
I will also treat of the rules governing the priority 
of securities, and as intimately connected with the 
topic, the ' tacking ' and ' consolidation ' of mortgages. 
The questions to which I intend to call your atten- 
tion are extremely important, and deserve very 
careful attention. I must, however, warn you at the 
outset that much of this branch of the law of secu- 
rities is still in a floating condition; and I am, there- 
fore, obliged to speak with some reserve. 



316 EXTINCTION OF SECURITY. 

LECTUBK A mortgage is, generally speaking, extinguished 
by consolidation, that is, by the property in the 
pledge vesting in the mortgagee, or by the acquisi- 
tion by the mortgagor of the right of the mortgagee. 
In such case, there is, technically speaking, a com- 
plete confusion of the security. The doctrine rests 
upon the impossibility of a man having a right of 
pledge over his own property, and is analogous to 
the extinction of a servitude when the dominant and 
servient tenement become vested in one and the 
same person. A very slight examination of the 
rule will, however, show that the doctrine must be 
received with some qualification, as cases may be 
easily put in which the application of the rule would 
lead to manifest injustice. Thus, supposing the 
equity of redemption is purchased by the prior 
mortgagee, if the effect of the purchase, were to 
extinguish the security, the result would be that the 
subsequent incumbrancers would be entitled to 
priority, and the prior mortgagee would thus be in 
a distinctly less favorable position than he occupied 
before. In such cases, the Roman law admitted 
an exception and recognised the right of the prior 
mortgagee to use his mortgage as a shield against 
the claims of the puisne incumbrancers. It has in- 
deed been suggested by some writers that the excep- 
tion applied only to those cases in which the pledgee 
was either ignorant of his own right of pledge or of 
the subsequent inciunbrances; but the better opinion 



CONSOLIDATION. 

seems to be that the exception was not hedged LECTUBK 
in by any such limitations. (See the authorities ^1 
cited in Ramu Naikun v. Subarayn Mudali, 7 Mad., 
229; and the Supplement to Markby's Elements of 
Law, p. 43.) 

A different doctrine, however, prevails in the Eng- 
lish law. The purchaser of an equity of redemption, 
with notice of subsequent incumbrances, stands in 
the same situation as if he himself had been the 
mortgagor, and cannot set up against such subse- 
quent incumbrances either a prior mortgage of his 
own, or a mortgage which he or the mortgagor may 
have got in. ( Toulmin v. Steere, 3 Mer., 210.) The 
prior mortgagee, however, may protect himself from 
the consequences of a merger of the debt by taking 
distinct steps to keep his security alive. If, however, 
the mortgage is not kept on foot as a distinct and 
distinguishable security, there will be complete con- 
fusion, and the mortgagee may not use it as a shield 
to protect himself from the claims of the puisne 
incumbrancers, (Watts v. Symes, 21 L. J. Chan., 
713; Heyden v. Kirkpatrick, 34 Beav., 645.) 

The rule of the English law on the point may 
perhaps seem to some persons as extremely artificial, 
and, on the whole, less equitable than the doctrine 
of the Roman law. Indeed, English lawyers them- 
selves would seem to share the impression, and the 
doctrine laid down in Toulmin v. Steere has been 
sought to be qualified in more recent cases. (See 



318 EXTINCTION OF SECURITY. 

LECTURE the observations of Knight Bruce, L. J., in Watts v. 

XII 

Symes, 1 DeG., Mac. and G,, 240.) It is, therefore, 
somewhat remarkable that the doctrine should have 
been adopted without question by some of the 
superior Courts in India. ( Gournarain Mujumdar v. 
Brojonath Kundu, 14 W. R., 491 ; Itcharam Dyaram 
v. Raiji Joga, 11 Bom., 41.) I do not wish to say 
anything which may wear the appearance of 
presumption or disrespect, but I trust I may be 
permitted to suggest without offence that the very 
high estimate which English lawyers almost always 
set on their own system is scarcely justified by a 
comparison with other systems of law, and more 
particularly Roman law. 

In the case of Ramu Naikun v. Subarayn Mudali 
(1 Mad., 229), the Madras Court, after comparing 
the doctrine of the Roman law with that of the 
English law on the point under consideration, refused 
to follow the English authorities, the learned 
Judges observing that the " rule of the Civil law is 
the true rule, and one to which the minds of English 
Judges are gradually tending." (Compare Narain 
Saha v. Ochut Saha, 14 W. R., 233; Syud Wajed 
Hossein v. Hafez Ahmed Reza, 17 W. R., 480.) There 
is thus an unfortunate conflict of opinion on the 
point among the superior Courts in India. The knot 
can perhaps be cut only by the Legislature. 

I may mention that the foregoing observations 
apply only to tl>e case of a mortgagee purchasing 



NOVATION, 319 

the equity of redemption, or a purchaser of the LECTUEB 
mortgaged estate paying off an incumbrauce on it. ^1 
They have no application whatever to the case of a 
mortgagor himself buying in an incumbrauce. If 
the mortgagor obtains the benefit of a prior mort- 
gage by an assignment of the security, or by pur- 
chase from the mortgagee under his power of sale, 
the charge is absolutely extinguished, and may not 
be set up against the puisne incunibraucers. (See 
the English case of Otter v. Lord Vaux, 2 K. & J., 
650.) The distinction rests upon a very intelligible 
ground, which I had occasion to explain in a pre- 
vious lecture. (See Lect. X.) A mortgage is only 
a security for a debt, and the mortgagor cannot be 
heard to complain of any increased facilities which 
may be offered to the subsequent incumbrancers for 
the recovery of their debts by an enlargement of the 
estate possessed by the mortgagor. A mortgagor 
cannot protect himself against his own incumbrances. 
To return. The second method by which a security 
comes to an end is by the discharge of the debt for 
which the security was given. The obligation may 
be discharged, not. only by an actual payment, but 
also by what is called novation, that is, the substi- 
tution of another obligation in place of the first. 
The substitution, however, may take place without 
destroying the former obligation when the novation 
is known as ' cumulative/ The rule of law, however, 
is, that in the absence of a clear expression of the 



320 SALE BY PLEDGEE. 

LECTURE intention of the parties to the contrary, the former 

XII 

" security is not extinguished. The ordinary pre- 
sumption in all sucli cases is, that the benefit of a 
security is not waived by the acceptance of another 
security in its place. (See Colq. Rom. Law 1852 
1855; Fisher on Mortgage, pp. 811 & 812; and 
Gopeebundhee v. Kalipodo Banerjee, 23 W. R., 338.) 
The pledgee also loses his right by renunciation, 
or by destruction of the pledge. The same result 
follows, if a third person has held the property for 
a period sufficient to create a prescriptive right. 
I may mention that a sale for revenue or any other 
statutory sale, which passes the property to the 
purchaser free of all incumbrances, does not, in 
reality, destroy the security of the mortgagee. It 
only transfers the charge from the land to the 
purchase money. 

In conclusion it is necessary to observe that a 
sale by the pledgee himself passes the property 
to the purchaser unincumbered by the security. 
The result is the same whether the property is sold 
under a decree for sale or by the mortgagee himself 
under his power; and, according to a recent decision 
of the Calcutta High Court, the benefit of the 
security passes to the purchaser even when the 
decree is simply for money, and does not expressly 
authorise a sale of the mortgaged estate. (Deno- 
bundhu Ghose v. Haran Base, 23 W. R., 186.) A 
mortgagee may not, in any case, sell the bare 



PitlORITY OF SECU1UTIES. 

equity of redemption. Any other rule would be LKCTUKK 

XII 

excessively harsh to the mortgagor; indeed it might 
be attended by the most disastrous results to him. 
Take, for instance, the case of a property worth 
Rs. 4,000, subject to a mortgage for one-half of that 
sum. If the mortgagee were allowed to sell the 
equity of redemption, which, by the hypothesis, is 
worth Rs. 2,000, the price which would be paid by 
the purchaser would, no doubt, satisfy the mort- 
gage debt, but the property would pass away from 
the mortgagor for only Rs. 2,000. It is possible 
that the mortgagor may become entitled by subro- 
gation to the security possessed by the creditor; 
but, as I pointed in a previous lecture, such a course 
would certainly lead to a perfect waste of litigation, 
which may be easily avoided by holding that when- 
ever the mortgagee sells the property on which his 
debt is secured, what he sells is not an undefined 
right like the equity of redemption, but the pledge 
itself unincumbered by his own security. 

I will now proceed to discuss the rules touching 
priority, one of the most intricate topics in the law 
of securities. Now, the general rule is, that priority 
is determined by the order of time. There are, 
however, exceptions to this rule either created by 
statute or recognised by the Court as founded upon 
those general principles of justice and equity which, 
in the absence of any express enactment, the Indian 

Courts are bound to administer. 

41 



322 INDIAN REGISTRATION ACT. 

LECTURE The first exception is that contained in Sec- 

XII 

tion 50 of the Registration Act, which, under certain 
circumstances, allows a registered mortgage priority 
over an earlier unregistered security. That Section 
says : " Every document of the kinds mentioned 
in clauses (1) and (2) of Section 18, shall, if duly 
registered, take effect as regards the property com- 
prised therein, against every unregistered document 
relating to the same property, and not being a decree 
or order, whether such unregistered document be of 
the same nature as the registered document or not." 
A similar enactment was contained in the earlier Acts. 

You will observe one rather remarkable omission 
in the law. The Act allows preference to a regis- 
tered instrument over an unregistered writing, 
where both belong to that group of instruments, 
the registration of which is optional. If, therefore, 
the puisne incuinbrance is one which the parties 
are bound to register, it will not be entitled to 
priority over an earlier unregistered security. 
(Hamvd Buksh v. Bindabun, 2 All., 37; Shaik 
Ryesatulla v. Durga Churn Pal, 24 W. R., 21.) 
A distinction is also made in favor of pnrol mort- 
gages when they a iv accompanied by possession. 

It is necessary to observe that, under the Indian 
Jstration Act, notice is immaterial. A registered 
instrument will be entitled to priority in every 
e, provided that the transfer is not merely color- 
able, or as it is usually called a paper, transaction. 



EFFECT OF NOTICE. 323 

It is true the Act is silent as to the effect of notice, LECTUBB 

XII 

but it does not follow that the protection was I 

intended to be confined only to a mortgagee with- 

V o O 

out notice of a prior unregistered security. The con- 
struction put by Lord Hardwicke on the English 
Act has been questioned by several eminent Judges 
as trenching upon the policy of the registration laws, 
and it would certainly require strong argument to 
show that the Indian Legislature intended to in- 
troduce into this country a doctrine which would 
have the effect of frittering away the provisions of 
a most beneficent enactment. The omission from 
the recent Acts of the clause in the second Section 
of Regulation XIX of 1843, by which notice was 
expressly declared to be immaterial, may per- 
haps lend some color to the suggestion that the 
old doctrine embodied in the earliest Regulation 
on the subject was intended to be revived. It 
would, however, not be safe to build any argument 
on such an omission. 

It would carry me much beyond the limits which 
I have proposed to myself in the present lecture, to 
enter upon a full discussion of the question. I 
may, however, point out that a comparison of the 
successive Registration Acts down to the 19th of 
1843, shows that ir, was necessary in the last statute 
to provide expressly that notice was immaterial in 
order to guard against the application of the 
English doctrine which had been embodied in the 



324 EFFECT OF NOTICE. 

LECTURE original Regulation. Besides, it may fairly be asked 

YT T 

1 >vhy lias not the Legislature in the later Acts 

expressly declared its intention to confine the pro- 
tection afforded by registration only to subsequent 
alienees taking without notice of a prior alienation. 
Such an enactment was contained in the original 
Regulation, and, if the doctrine was intended to be 

O r I 

revived after having been advisedly repealed by 
subsequent legislation, the provision would probably 
have been repeated in the more recent statutes. 

I have been induced to make the foregoing 
observations, because, in the case of Jivandass Kesh- 
avji v. Framji Nanabhai (7 Bom., 45), the Court 
seems to have held that the English doctrine of 

o 

notice was applicable to Act XVI of 1864, the pro- 
visions of which on this point are similar to those 
of the present statute. In that case express notice 
was alleged; but if you once introduce the doctrine 
of notice, I do not see how questions of constructive 
notice can be wholly shut out, and thus the protection 
afforded by the Registration Act would be, in great 
measure, if not wholly, illusory. The doctrine, how- 
ever, laid down by the Court in Kasliavji v. Framji 
was not actually necessary for the decision of the 
case, as the mortgage to the registered mortgagee 
\vas. on the face of the instrument, subject to the 
prior unregistered incumbrance. No question of 
priority, therefore, could possibly arise, as the 
subsequent mortgage did not purport to be a mort- 



SALVAGE ADVANCES. 325 

gage of anything more than the bare equity of LECTUBB 
redemption. (Compare Kishore Bhat Gullabhai v. 
Jorabhai Daji, 7 Bom., A. J., 56.) 

To return. Another class of exceptions to the 
general rule, by which priority is determined by the 
order of time, is to be found in certain decisions of 
the Bombay High Court, introducing the rule of 
Hindu law, by which preference is, in some cases, 
given to a mortgage followed or accompanied by 
possession. The application of the doctrine is, 
however, confined only to a few districts in that 
presidency. As I told you in a preceding lecture, 
preference is given only to a puisne incumbrancer 
without notice of the prior security, and, as registra- 
tion at the present day serves the same purpose of 
publicity as tradition in ancient law, the delivery of 
possession affords no protection against an earlier 
registered security. This is probably the ground 
on which the application of the rule of Hindu law 
has been narrowed in recent decisions, for registra- 
tion, of itself, could not alter a rule of law, except 
so far as effect may be given to it by statute. 
(Itcharam Dyaram v. Raiji Joga, 11 Bom., 4.) 

Another important exception to the general rule 
touching the priority of securities, is recognised in 
favor of advances in the nature of salvage, that is 
advances made for the purpose of protecting a 
property from forfeiture or destruction. The lien 
of the salvor is known as a privileged lien, and upon 



326 PRIORITY OF SALVOR'S LIEN. 

LECTURE the plainest principles of equity, takes rank above 
' every other charge on the property. This rule 
obtains in almost every system of law, and has been 
admitted in this country. (See Ska Enayet Hossein v. 
Madan Mohun Sahun, 22 W. R., p. 411.) There is 
another peculiarity about salvage liens which I ought 
to notice. It is that among themselves they are 
entitled to priority in the inverse order of their dates. 
The general order is here reversed, and the charge 
which is latest in point of time is entitled to pre- 
ference over others earlier in date. The rule rests 
upon the obvious ground that, unless the last ad- 
vance had been made, the property could not have 
been preserved for the benefit of the previous lenders. 
It is necessary to observe that, where a payment is 
made to save an incumbered property from forfeiture, 
the person making the advance ought to take care 
that the facts sufficiently appear upon the face of any 
instrument which may be subsequently executed by 
the person who is benefited by the payment, as other- 
wise the creditor might forfeit his priority. In con- 
clusion I must throw out a caution that it does not 
follow that a person, lending money to another for 
the purpose of preventing a forfeiture, will be en- 
titled to a privileged lien, even though the fact may 
appear on the face of the instrument, and the money 
is actually applied for the purpose. There is no 
authority on the point, and I do not think it neces- 
sary to offer any opinion on it one way or the other. 



FUTURE ADVANCES. 327 

In some systems of law, however, as I have already LECTUBB 
pointed out, charges of this nature are entitled to ^i 
preference over others earlier in date. 

The principle on which the priority of a mort- 
gage to secure future advances should be determin- 
ed, is a question of some nicety. The general rule 
is, that if, by the terms of the instrument, the mort- 
gagee is bound to make the advance, he would be 
entitled to the same priority as if the money had 
been advanced at the execution of the morto-ao-e 

DO* 

( 1023, Story's Equity Jurisprudence.) If, how- 
ever, the terms do not bind the morto-ao-ee to make 

' O o 

any advances, no present debt is created, and it seems 
that the mortgagee would be postponed in respect 
to any advances made by him after notice of a subse- 
quent incumbrance. This is now the law in England 
(Shaw v. Neale, 6 Ho. Lo. Cas., 581), and will pro- 
bably be followed in India. The only doubt that 
suggests itself to me is, whether in this country 
the mortgagee will not be postponed even in the 
absence of any notice in respect to advances made 
by him after the execution by the debtor of a mort- 
gage on the same property in favor of another person. 
There is, however, no authoritative decision on the 
point, and I have drawn your attention to it only for 
the purpose of pointing out that the English rule 
must not be accepted without a more careful exami- 
nation of the principle on which it rests than I am 
now able to give to the question. 



328 "TACKING." 

LECTURE The discussion has conducted us to a topic which 

XII 

1 is familiarly known to English lawyers as tacking, 

and on which it is necessary to make a few obser- 
vations. Now, the right of tacking was, as I told you, 
recognised to a certain extent in Roman law, which 
would not suffer the pledgor to redeem the pledge 
without paying to the pledgee, not only the debt 
for which the security was giv 7 en, but also any 
other claim for money in writing possessed by the 
creditor against the pledgor. The right ? however, 
could not, in any case, be exercised to the pre- 
judice of a third person. This qualified right, 
however, is not what English lawyers understand 
by " tacking." Building upon the maxim " where 
the equities are equal, the law shall prevail," the 
English Court of Chancery has introduced a 
highly artificial rule, by whi?h a mortgagee may, 
under certain conditions, entitle himself to pri- 
orit} r over an incumbrance earlier in point of 
date. The doctrine may be thus stated : A mort- 
gagee without notice, purchasing the first incum- 
brance, shall thereby protect his estate against an 
intermediate iocumbrance, although he purchased 
in the incumbrance after he had notice of the 
subsequent incumbrance. You will observe that 
the first mortirai>-ee has what is called the leiKil 

O O O 

iU-, and as the mortgagee purchasing in the first 
incumbrance, advam-ed the money without notice of 
the intermediate incumbrance, he has, at least, as 



DOCTRINE OF ENGLISH LAW. 329 

strong an equity as the intermediate incumbrancer. 



XII 

Equity will not, therefore, disarm him of the advan- 
tage which he has secured for himself, and thus 
'the equities being equal, the law shall prevail.' 

The origin of the doctrine is thus explained by 
Lord Hardwicke : " As to the equity of this Court," 
observes his Lordship, " that a third incumbrancer, 
having taken his security or mortgage without 
notice of the second incumbrance, and then being 
puisne, taking in the first incumbrance, shall squeeze 
out and have satisfaction before the second, the 
equity is certainly established in general, and was 
so in Marsh v. Lee, by a very solemn determina- 
tion by Lord Hale, who gave it the term of the 
' creditor's tabula in naufragio ;' that is, the leading 
case. Perhaps, it might be going a good way at 
first; but it has been followed ever since, and I 
believe was rightly settled, only on this foundation, 
by the particular constitution of the law of this 
country. It could not happen in any other country 
but this; because the jurisdiction of law and equity 
is administered here in different Courts, and creates 
different kinds of rights in estates ; and, therefore, 
as Courts of Equity break in upon the common law, 
where necessity and conscience require it, still they 
allow superior force and strength to a legal title to 
estates; and, therefore, where there is a legal title 
and equity on one side, this Court never thought 

fit that, bv reason of a prior equity against a man 

1-2 



330 CONSOLIDATION. 

LKCTURE who had a legal title, that man should be hurt; and 

XI I 

, I this, bv reason of that force, this Court necessarily 

j / 

and rightly allows to the common law and to legal 
titles. But if this had happened in any other 
country, it could never have made a question; for, 
if the law and equity are administered by the same 
jurisdiction, the rule, qui prior est tempore potter est 
jure, must hold." ( Worthy v. Birkhead, 2 Ves., 
571.) 

It is hardly necessary to add that our Courts have 
refused to follow the English doctrine on the subject. 
(11 W. R., 310.) There is, however, another maxim 
of the English Court of Chancery less open to objec- 
tion, which applies not to tacking properly speaking 
but to the right to a consolidation of all the securi- 
ties possessed by the creditor without any question as 
to priority. He who seeks equity must do equity, and 
redemption being an equitable right, the mortgagor 
may not redeem without on his part doing equity to 
the mortgagee. Thus, if the owner of two or more 
different estates mortoao-e them successively for dis- 

O O * 

tinct debts to the same person, the mortgagee has a 
right to insist that one security shall not be redeemed 
alone leaving him exposed to the risk of deficiency as 
to the others, but that the mortgagor must redeem 
him entirely. The right in fact claimed by the 
mortgagee in such cases is analogous to the right 
recognised by the Roman huv, and has been admitted 
by our Courts as resting not upon any technical 



SUBSEQUENT ADVANCES. 331 

ground, but upon the plainest principles of justice LECTURE 

XII 

and equity. ( Vithal Mahadeo v. Daud Valad I 
Mahomed Hossein, 6 Bom., 90.) The doubt, how- 
ever, which I have expressed in respect to the 
applicability of these general maxims to mortgages 
governed by the Bengal Regulations, applies also 
to the present question. The Courts in the other 
provinces are not fettered by any positive enact- 
ments, and are, therefore, in a position to introduce 
a larger number of the doctrines of the English 
Court of Chancery than the Courts of Allahabad 
or Calcutta. 

The rule of English law, however, touching the 
consolidation of securities, however unexception- 
able when confined to the mortgagor or his heir, 
becomes of questionable propriety when extended 
to a purchaser, even though he should have pur- 
chased without notice of any other mortgage. 
(Ireson v. Denn, 2 Cox, 425.) The doctrine has not, 
however, yet received the same extension in this 
country, and will probably be recognised ooly in a 
qualified form. 

It would seem that debts, which are not secured 
by a mortgage, may not be consolidated. In pledges 
of moveables, however, the Legislature has recog- 
nised a qualified right to tack subsequent advances. 
There is, however, no authority for extending the 
right to a mortgage of land. (N. W. P., Vol. IX, 
p. 465; 1860, p. 122.) 



332 FORFEITURE OF PRIORITY. 

LECTURE I shall next proceed to discuss the various ways in 

XII. 

- '- which priority may be forfeited. Now, a mortgagee 
forfeits his priority if he is guilty of fraud, either 
actual or constructive. Thus, if he should induce 
another by concealing his own mortgage to lend 
money on the security of the property pledged to him- 
self, he will be postponed to the subsequent incum- 
brancer whom he has misled. There may be no 
duty upon the prior mortgagee voluntarily, and 
without being asked, to disclose his security ; but 
any actual misleading, either by acts or declarations, 
will be followed by a forfeiture of his priority. It 
would take me much beyond the limits I have pro- 
posed to myself in this lecture, to state the various 
circumstances which would be sufficient to fasten 
upon the prior mortgagee a charge of actual or con- 
structive fraud. The subject is discussed in Story's 
Equity Jurisprudence, to which I would refer those 
who wish to pursue the enquiry. The following cases 
also may be usefully consulted. (11 W. R., 286; 
5 Agra, 402.) 

A mortgagee may also forfeit his priority by his 
own laches. Thus, for instance, if the mortgagee 
should suffer the title-deeds to remain in the cus- 
tody of the mortgagor, he will, under certain cir- 
cumstances, be postponed to a subsequent incum- 
brancer who may have advanced money on the 
faith of the title-deeds. The earlier English autho- 
rities were very stringent against the mortgagee who 



DEEDS OF FURTHER CHARGE. 333 

put the mortgagor in a position to mislead third LF.CTUBE 
persons ; but the rule has been considerably relaxed 
in more recent cases. The mere possession of the 
title-deeds by the second mortgagee will not give 
him priority. There must be some act or default on 
the part of the first mortgagee to have this effect. 
The non-possession, however, of the title-deeds, 
is a circumstance which the mortgagee is bound 
to explain. But if he can satisfy the Court that 
the absence of the title-deeds was reasonably 
accounted for by the mortgagor when he obtained his 
mortgage, or that he was subsequently induced to 
part with them, under such circumstances as to 
exonerate him from any serious imputation of negli- 
gence, he does not lose his priority. This is how 
the law stands upon the more recent authorities in 
England, and it was followed in Madras in Somasun- 
dara Zambiran v. Sakkarai Pattern. (4 Mad., 369.) 

I have already explained how the first mortgagee 
in possession is postponed as regards the rents and 
profits which he suffers the mortgagor to receive 
after notice of a puisne iucumbrauce. 

A practice obtains in this country, which is not 
the less objectionable because it is almost universal. 
When money is advanced by way of further charge, 
the original mortgage deed is not unfrequently can- 
celled, and the property pledged by a second instru- 
ment for the consolidated sum. Deeds of further 
charge are very rarely executed outside the Presi- 



334 LIS TENDENS. 

LECTUEE dency Towns. Again, it frequently happens that 
when the mortgagor is unable to repay the loan, an 
account is taken of the moneys due to the mortea^ee 

f o r 

on his security, and a fresh bond is executed, by 
which the property is pledged for the original debt 
with the accumulated interest. The property, 
however, may have been intermediately pledged to 
a third person, and the mortgagee may be thus in 
danger of losing his priority. The reported cases 
on the subject, however, show that the Court 
will not presume, except on very strong grounds, that 
the original security was intended to be relinquished. 
( Gopee Bundhoo Shantra V- Kalee Pudo Banerjee, 
23 W. R., p. 338; S. D. A., 1856, p. 942; 1857, 
p. 1184.) The subject has been already discussed 
by me when treating of the extinction of securities. 
It must not, however, be supposed that, as against 
an intermediate incumbrancer, the security will 
be entitled to priority, except to the extent of 
the advances actually made before the execution of 
the subsequent mortgage, and where the iiiteivst 
is turned into principal, the agreement for com- 
pound interest will have no effect as against the 
intermediate incumbrancer. 

In connection with the question of priority there 
is one topic, on which a few words will not perhaps 
be thrown away. I allude to the doctrine of 
//.v y>fWr//.v. In consequence of the rule jwndfntr 
lite niltil iniu>L'L'fun\ the priority of a security 



LIS PENDKNS. nor 

cannot be affected by any iucumbrance created by i 
tbe mortgagor during the pendency of a suit 
for foreclosure or sale. This maxim is not found- 
ed upon any technical ground as to constructive 
notice, but on the broad principle, that litigation 
would be interminable if any of the parties to 
an action could create any right in favor of a third 
person during the pendency of a suit. As observ- 
ed by Lord Cranworth in Bellamy v. Saline (26 
L. J., Ch., 797, N. S.): "It is scarcely correct to 
speak of Us pendens as affecting a purchaser 
through the doctrine of notice, though, undoubtedly, 
the language of the Courts often so describes its 
operation. It affects him, not because it amounts 
to notice, but because the law does not allow 
litigant parties to give to others, pending the litiga- 
tion, rights to the property in dispute, so as to pre- 
judice the opposite party. Where a litigation is 
pending between a plaintiff and a defendant as to the 
right of a particular estate, the necessities of man- 
kind require that the decision of the Court in the 
suit shall be binding, not only on the litigant parties, 
but also on those who derive title under them by 
alienations made pending the suit, whether such 
alienees had or had not notice of the pending 
proceedings. If this were not so, there could be 
no certainty that the litigation would ever come to 
an end. A mort^a^e or sale made before final 

o o 

decree to a person who had no notice of the pond- 



FORECLOSURE PROCEEDINGS. 

LKCTURB m g proceedings, would always render a new suit 

VT r 

1 necessary, and so interminable litigation might be 

the consequence." (Ballajee Gunesh v. Khushalji, 
11 Bom., 24; Gulabchand v. Dhondie, 11 Bom., 64; 
Ravji Narain v. Krishnajee Lakshman, 11 Bom., 
139; and Pullukdharee v. Mohabir Sing, 23 W. R., 
382.) 

It is only necessary to add that, under Regula- 
tion XVIII of 1806, the application of the mort- 
gagee for foreclosure would seem to be the commence- 
ment of the suit for the purposes of Us pendens. 
I had occasion to consider the question in a previous 
lecture, and need not, therefore, repeat what I then 
said (Lect. VI). It would, however, not be safe for 
the mortgagee to disregard the transfer altogether, 
and where the alienation takes place after the insti- 
tution of the foreclosure proceedings, but before the 
commencement of the regular suit by which they are 
almost invariably followed in Bengal, the purchaser 
ought to be made a party defendant, as well as the 
original mortiniojor. 

O O O 

Here I conclude the lectures of the term. I 
have endeavoured to give you a short account of 
the law of securities in this country. A mere bead- 
roll of cases, however useful to the practitioner, 
would have been of doubtful utility to the student, 
and I have, therefore, attempted to explain, as fully 
as I could in the compass of these lectures, the prin- 
ciples ou which the law is founded. 'lie kuowcth 



IN THE BENGAL PRESIDENCY. 337 

not the law who knoweth not the reason of the LECTURE 

XII 

law ' is a saying which the student should always 
bear in mind, and you will pardon me if I venture 
to affirm what is now accepted almost as a truism 
that a careful study of general principles as illus- 
trated in different systems of law, will not be wholly 
useless to you when you enter upon the practical 
duties of the profession. It may not be given to 
every one of us to attain high forensic skill, but 
depend upon it, the culture gained by the scientific 
study of law is never wholly thrown away, even 
though it may not in every case be crowned with 
professional success. 



APPENDIX I. 

Since these lectures were delivered, my attention has 
been called to an uureported decision of Bayley and 
Hobhouse, JJ., in which the Calcutta High Court refused 
to follow the ruling of the Sudder Dewanny Adalut in 
Bhowany Churn Mitter's case. The facts sufficiently ap- 
pear from the judgment. 

IN THE HIGH COURT OF JUDICATURE AT FORT 
WILLIAM IN BENGAL. 

The 2Srd of September 1869. 

PKESENT : 

The Honorable Vincent Bayley and the Honorable Sir Charles 
Parry Hobhouse, two of the Judges of this Court. 

CASE No. 135 OF 1869. 

Regular Appeal from a decision passed by the Subordinate Judge 

of Zillah Dacca, dated the 15th of March 1869. 

SUNATUN BYSACK, Defendant (Appellant), 

versus 

KOONJO BlHAREE BYSACK, GoBINDHUN BYSACK, CHYTUNKISTO 
BYSACK, SADHOO CHURN BYSACK, AND GOBIND CHURN BY- 
SACK, Plaintiffs (Respondents). 
Baboo Romesh Chunder Hitter for Appellant. 
Baboo Onnoda Persaud Banerjee for Respondents. 
Bayley, J. THIS was a suit by the plaintiffs to recover from 
the defendant Rs. 5,600, being the principal of the overdue 
instalments to be paid under a certain deed of mortgage, together 
with Rs. 654-4 annas as interest on the said amount, by attach- 
ment and sale of the mortgaged properties, mentioned in the 



340 APPENDIX. 

schedule of the plaint. The plaint stated that the cause of 
action, with regard to the first eight instalments, accrued on the 
2nd October 1866. In regard to four others on the 9th Febru- 
ary 1869, and in regard to four others on the 9th February 1868 ; 
that a notice was served on the defendant on the 1st June 1868, 
requiring him to pay under the deed of mortgage, but that the 
defendant did not pay the money, and consequently the plaintiff 
prayed "that the Court may be pleased to award from the 
defendant and the mortgaged properties the amount claimed, 
together with costs and interests." 

The defendant's answer was to the effect, that as there was a suit 
already pending in the Original Side of the High Court, in which 
the mortgage instalment bond in question was filed, until that 
case is decided, a second suit on the basis of the said instalment 
bond could not be entertained ; that, ere this, the plaintiffs had 
preferred a similar claim in the Original Side of the High Court 
for the instalments due on the said bond, but that the suit was 
dismissed, hence the present suit was res adjudicata ; that the 
terms of the instalment bond were such as enabled the plaintiffs 
to bring to sale the pledged property by enforcing the said bond 
without the necessity of having recourse to a suit like the 
present, especially as the defendant never made any objection to the 
snm being realized by the sale of the properties mortgaged ; that 
the present suit was brought merely to harass the defendant ; 
and lastly, that the amount of interest was improperly calculated, 
and that all that was claimed was not in fact due. 

The judgment of the Lower Court is not very clear, but 
it evidently draws a distinction between the Courts where the 
English law prevails as in Calcutta, in which, under a bond, 
property can be sold in realization of monies due under it 
without the intervention of a Court, and the Mofussil Courts, 
where the Lower Appellate Court remarks, such property cannot 
be sold without the Court's intervention. It says : " It is not 



APPENDIX. 34,1 

legal for any mortgagee to sell of himself the mortgaged property, 
situate within the jurisdiction of the Mofussil Courts." 

As to interest, the Lower Court considers that the plaintiffs 
claim was a just one, and the order of the Court is, " that the suit 
be decreed, and that the amount claimed and interest on the 
principal amount for the period of pendency of the suit at the 
rate of Rs. 6 per cent, per annum, and costs in Court, together 
with interest on the consolidated amount at Rs. 6, be realized 
from the defendant and the mortgaged properties." 

From this decision the defendant appeals to this Court, and the 
first, second, and sixth grounds of appeal may be well considered 
together. The first is, that the plaint discloses no cause of 
action. The second ground is also almost to the same effect, being 
that, whereas there is nothing in the plaintiffs' statement to show 
that the defendant was called upon to pay the money due under 
the mortgaged bond by the sale of any portion of the mortgaged 
premises and refused to carry out the proposal, the plaintiffs 
had no right to bring this suit. The sixth groiind is, that the 
contract between the parties was such as that there could be no 
decree against the person of the defendant as given by the Lower 
Court. In addition to these, there are other grounds taken in 
appeal to the effect, that the Lower Court was wrong in holding 
that, in Mofussil Courts, a claim, such as this, could not be realized 
without the intervention of a Court of Justice ; that the terms of 
the contract were sufficient to enable the plaintiff to realize what 
was due from the mortgaged property without bringing an action 
in Court ; and lastly, that the plaintiff was not entitled to the 
interest he claimed, or to any interest previous to the date of 
mortgage. It is further urged before us, although the point is not 
taken in the written grounds of appeal, that, if the plaintiffs are 
entitled to any decree at all, it must be without any costs. 

Now, if we read the grounds of appeal, together with the 
objections taken in the written statement, there appear in the 



342 APPENDIX. 

first place two main objections to the plaintiff's suit. The first 
is, that pending adjudication in the Supreme Court of the suit 
there, this suit cannot be heard ; and the second is, that the 
present suit is of the character of a res adjudicata. 

With regard to the first point I would observe, that the same 
subject-matter cannot be said to be pending adjudication in the 
Original Side, for that is a suit on the general question of family 
right, and that family suit is a subject-matter separate and dis- 
tinct from the matter now in dispute. 

In regard to the second point, it is stated that a similar suit on 
the basis of the very instalment bond was brought before the 
High Court in its Original Side and dismissed, and hence the 
present suit on the basis of the said bond would be a res judicata. 
But the fact is that that suit only was, and could only be, for 
property, within the local jurisdiction of that Court, whereas the 
property now in dispute is without the jurisdiction of that Court. 
The subject-matters therefore of the suit there, and of the suit 
here, are each entirely different. 

Having disposed of these two objections to the suit, the next 
point to be considered is, whether, by the terms of the contract 
itself, the plaintiffs could bring this suit. Now, the terms of the 
contract are these. After reciting that the sums due shall carry 
interest, (as to which matter I shall have to remark hereafter,) the 
deed says " the sums shall be recoverable by a separate suit in 
respect thereof or by sale of a portion of the mortgaged premises 
sufficient to realize the amount so due." I think that, on the 
express terms of this contract, it was open to the plaintiffs to sue 
to have their right declared by a Court of Justice, to realize the 
money due by sale of the mortgaged property. The word "or" 
clearly indicates that there was the option. It is very strongly 
pressed on us, that there was no objection made by the defendant, 
and no consent was withheld as to the property being sold by a 
private sale or otherwise as the creditor might think best for the 



APPENDIX. 343 

realization of his money due, and, therefore, there being no cause of 
action, the present suit was unnecessary, and to use the terms of 
the pleader, vexatious. But as I before observed, a clear option 
was given by the very terms of the contract to the plaintiffs to 
bring a suit in Court. There may have been good reasons for their 
instituting the present suit in Court, as the preferential course 
for a declaration by a Court of their right would probably be less 
open to future difficulties than might follow a private transfer. 
It is quite clear, moreover, that it was stipulated in the deed of 
mortgage, that a notice of a month's date was to be served 
upon the defendant for the payment of the money. It is also 
to be remarked that it was quite within the power of the de- 
fendant to avoid the necessity of the plaintiff's bringing an 
action under the specific terms of the contract by at once paying 
off the money claimed; but he did not do this; so far from paying 
it when the suit was brought by the plaintiffs in Court, he resist- 
ed the claim as it then stood, urging in his written statement that 
the amount of interest claimed was not really due. Thus, there 
was a clear dispute raised on the subject of the claim made by 
the plaintiffs, and accordingly there was thus a cause of action 
and the necessity of an adjudication by the Court of the point 
in dispute. 

I may, perhaps, properly notice in this place that there is a 
decision in page 354, S. D. Rep. of 1847, wherein it is held 
that a party, even under a contract, cannot realize by sale of 
the mortgaged properties the sums he claims, except with 
the intervention of a Court of Justice. Now, under the terms 
of this contract, it was perfectly open to the plaintiffs either to 
institute the suit, or (to use the terms of the contract) adopt the 
alternative of proceeding to sell. Of course the decision cited 
is clear in its terms, but it is one passed about two-and-twenty 
years ago, and it is not shown to us that it has been followed by 
a single case after its date. But be that as it may, it seems to 



344 APPENDIX. 

me quite clear that, under the general law of contract, when 
parties agree to alternative remedies to be available to the 
creditor under their contract, it would be perfectly inequitable in 
a Court of justice, equity, and good conscience, to refuse to carry 
out the terms of the contract, imless it is shown that those terms 
involve direct illegality or immorality. But nothing of this 
kind is shown or attempted to be shown in this case. 

There is then an objection raised to the effect that, under the 
terms of the contract, the suit would not lie against the person, 
as also against the properties of the defendant. But in my 
opinion, the terms are such as quite leave it open to the plaintiffs, 
either to realize the monies due, from the person of the defendant, 
or from his properties, or from both. Baboo Onnoda Persaud 
Banerjee, for the plaintiffs, declares, however, that the main object 
of his clients is to realize the money from the properties 
mortgaged. 

The only point then that remains to be considered is that of 
costs. Now, as to costs, the ordinary rule is, that, where the 
plaintiff gets a decree, he is entitled to his costs ; but the question 
of costs is one, a matter of discretion. In this case, the plaintiffs 
mi^ht, under the alternative terms of the contract, realize the 
money due to them, by the sale of the properties mortgaged, 
without having recourse to the Court, and albeit there was an 
option given to him to come into Court. I am of opinion that, 
if they have elected the option which has put the other party, 
who did not oppose the realization of the money due by sale 
of the mortgaged property, to the trouble and expense of coming 
into Court, the case is one where, in a proper exercise of our 
discretion, no costs ought to be awarded to the plaintiffs. 

In this view of the case, I would on the main uphold the 
e that the Lower Court has passed in the case with this 
modification, that each party must bear his own costs, both of the 
Court and of this Court. 



APPENDIX. 345 

Hobhouse, J. Mr. Justice Bayley has stated so completely 
the pleadings on either side, that it does not seem to me to be 
necessary to go over that ground again/ I shall, therefore, begin 
by simply stating what to my mind are the material points of 
the agreement between the parties, of date the 2nd March 1866, 
on which the contention before us hinges. I understand that, 
under that agreement, the defendant held himself bound to pay 
a certain sum of money to the plaintiffs ; that he pledged 
certain properties as security for the repayment of the money ; 
and that it was then provided that he was to repay the same by 
certain quarterly instalments. The conditions as to repayment 
by instalments form an essential part of the contention before us, 
and I shall, therefore, quote those conditions at length. They are 
these : That the defendant was to repay the principal sum of 
Rs. 29,380 "by quarterly instalments of Rs. 350 on the days 
and in the manner hereinafter mentioned, that is to say, the 
sum of Rs. 3,500, as being the aggregate amount of ten 
quarterly instalments, to be calculated from the 9th day of 
February 1864 up to the 8th day of August 1866 (together 
with such, interests as may be due under the covenant herein- 
after contained), to be paid and become payable immediately 
on the execution of these presents, and from thenceforth by 
quarterly instalments on the 8th day of November next; the 
second quarterly instalment on the 8th day of February then 
next following ; the third quarterly instalment on the 8th day 
of May then next following; the fourth quarterly instalment 
on the 8th day of August then next following ; and so on, by 
quarterly instalments on the like days in every year, until the 
whole amount, or the full sum of Rs. 29,380-5-3$, be paid 
off and liquidated." Then followed certain other conditions 
which do not seem to be essential to the issue before us, and 
then we have the following condition in the deed: "And 
further, that in case all four of the said quarterly instalments,- 

44 



346 APPENDIX. 

amounting to Rs. 1,400 in a year, payable by the said Sonatun 
Bysack to the said Koonjo Biharee Bysack, Gobindhun By sack, 
Chytunkisto Bysack, Sadhoo Churn Bysack, and Gobind 
Churn Bysack and their heirs, representatives and assignees, or 
any of such instalments or any part of the same shall at the 
close of every and each year remain in arrears and unpaid, 
every such year being calculated from the 9th day of February 
of one year to the 8th day of February of the next year, that 
then, and in such case, the same or so much thereof as shall 
remain due at the close of the year, shall carry interest at the 
rate of 6 per cent, per annum, and shall be recoverable by a 
separate suit in respect thereof, or by sale of a portion of the 
mortgaged premises, sufficient to realize the amount so due." 
These, I think, are all those points of the contract between the 
parties which it is essential for the purpose of this suit to have 
clearly before us, and 1 shall refer to these conditions of the 
contract as each point arises hereafter. The first contention, as 
I understand it, made by the appellant before us, is, in reality, 
that the plaintiff has no cause of action, and he rests his conten- 
tion, as it seems to me, mainly on these arguments, viz., that the 
object of the plaintiffs was to obtain the monies in dispute by sale 
of the properties, and that inasmuch as the plaintiffs had the 
power to sell those properties by the agreement between the 
parties, and inasmuch also as the defendant never objected to such 
sale, therefore there was in reality no cause of action against 
him. The answer, however, to this contention, seems to me to be 
this, viz., that, by the agreement between the parties, the plain- 
tills were not bound to realize their monies by the sale of the 
properties mortgaged, but they had the option, oil her of so 
realizing the monies, or else of proceeding against the, defendant, 
by a suit to recover the same, and it seems to me that they had 
ampli- cause ..(' action in the notice which was served upon the 
defendant to pay, and which he disregarded. It is, however, 



APPENDIX. 347 

contended, that, so far as that notice is concerned, it was a notice 
under the terms of the agreement, and that it must, therefore, be 
considered as a notice of sale, and not a notice giving a cause of 
action to this suit ; but it seems to me that the notice might be 
used either way. By the terms of the agreement, there was a 
sum of Rs. 3,500 principal due to the plaintiffs on the 2nd March 
1866, and by the terms of the same agreement there were certain 
other sums of money, being instalments on the bond, due up to 
the 8th February 1868. Now, the notice was in the shape of a 
demand upon the defendant to pay those monies, and when, 
therefore, the defendant neglected, or refused to pay the same, 
and it is admitted that he did either the one or the other, then 
there was clearly a cause of action to the plaintiffs to sue to 
recover the same. They might, of course, have used the notice 
simply as preparatory to the sale, but they might equally, as it 
seems to me, use it, as they did use it, as a cause of action on 
which to proceed to sue. I think, therefore, that the plaintiffs in 
this case had a cause of action against the defendant. 

The next objection in order of sequence is to the effect that, if 
it be admitted that the plaintiffs could sue, still they could not 
sue as well against the defendant personally as also against the 
properties mortgaged in the bond; and the grounds of this 
objection are that, when by the agreement between the parties 
the plaintiff had a specific remedy given to him, by which 
he could sell the properties without having recourse to the 
Courts, then he was not entitled unnecessarily to drag the defend- 
ant into Court, in order that he might sell that property by 
resorting to the Court, which he had power to sell without any 
such resort. I confess that when this argument was first made, I 
considered that it had very considerable force in it, but on reflection 
I think, that however much it may affect the case as regards the 
award of costs, yet it does not affect the case as regards the nature 
of the suit which it was within the plaintiff's competency to bring. 



348 APPENDIX. 

The words of the contract seem to me, on acareful consideration of 
them, to be very plain, and go no further than this, viz., to give an 
alternative course of procedure to the plaintiffs. They are to the 
effect, that if the defendant shall fall into arrears of instalments, then 
the instalments shall be " recoverable by a separate suit in respect 
thereof or by the sale of a portion of the mortgaged premises 
sufficient to realize the money due," so that when the defendant 
fell into arrears, the plaintiffs had clearly a right under the contract, 
either to sue for those arrears, or else to sell the estates mortgaged, 
and thereby recover the arrears, and there was no restriction placed 
upon the kind of suit to be instituted. The contract declared 
simply, that the plaintiffs were entitled either to sue or^to sell, and 
one of the commonest forms of suit in this country is, as pointed 
out by Baboo Onnoda Persaud for the respondent, that of a suit 
on a mortgage bond, praying for the realization of the money 
due, and also that the amount of the said money be declared to be 
due upon the property mortgaged. When, too, I come to look 
more carefully at the prayer in the plaint itself, it seems to me 
that that prayer, in the words of the plaint, is.to the effect that 
" the Court may be pleased to award from the defendant and the 
mortgaged properties the amount claimed with costs and in- 
terests," so that the object was to have it declared, not generally 
that the plaintiff had a lien on the property for the repayment of 
the monies advanced, but particularly that the specific sum 
which the plaintiffs claimed from the defendant was due from the 
defendant, and that he and the property he had mortgaged were 
liable for that sum. I think, therefore, that the plaintiffs were 
not restricted by the terms of the agreement from suing in the 
form that they adopted, and that the plaint was one which ob- 
viously, if there was no special restriction by the agreement, might 
be brought in a Civil Court. 

The only question that remains is as to costs, and, though 
perhapl on this point I should have ln-cn inclined to go even 



APPENDIX. 349 

further than my learned colleague, and to have given the defend- 
ant, appellant, at least his costs of this Court, yet looking to the 
fact that there was a contention between the parties as to the 
interpretation of the bond, I am on the whole content that the 
judgment as to costs should be as Mr. Justice Bayley has put 
it. I have said that I think that the plaintiffs were not prevent- 
ed by the terms of the bond from instituting this suit. But the 
plaintiffs' pleader informs us that his main object in the suit, and 
that is also stated in the preamble of the plaint, was to attach 
and sell the mortgaged properties. The plaintiffs' main object 
therefore was to sell the properties mortgaged. That was why 
they sued, but it is manifest that, by the very terms of the agree- 
ment, they could have gained that object by selling the mort- 
gaged estates at a private sale, and if they could have done so, 
then, when it is quite clear, that there was no obstruction or objec- 
tion to their doing so on the part of the defendant, although we 
may think that the plaintiffs are entitled to a decree, we should 
not, I think, be justified in giving them their costs. 

I quite agree with Mr. Justice Bayley that the decision of the 
Sudder Dewany Adawlut of 1847, at p. 354, ought not to bind 
us. That decision is to the effect that where a mortgagee was 
entitled under the contract between him and the mortgagor to 
sell the property mortgaged if the debts were not paid, then 
when the mortgagee did sell the property, and the vendee claim- 
ed possession after the sale, he could not obtain possession 
because of that policy declared by the laws of this country which 
made such a sale altogether inoperative. Now, it seems to me 
that if it were the intention of the Legislature in any instance 
to prevent contracts between private parties being binding in all 
their particulars, the Legislature would specially have said so, 
and would have assigned its reasons ; and in furtherence of this 
view I find from the very decision relied upon that wherever the 
Legislature interfered in contracts between parties, it has done so 



350 APPENDIX. 

by special legislation, and for special reasons assigned ; for 
instance, Regulation XVII of 1806, which was between the mort- 
gagor and the mortgagee, requires foreclosure proceedings to be 
carried out through the Court. It seems to me that there is 
nothing in any proceeding of the Legislature which evinces any 
desire to interfere in matters of private contracts between parties 
except in special cases and for special reasons assigned, and I 
quite agree in the remarks to be found at p. 45 of Macpherson 
on Mortgagee, Edition of 1868. I am of opinion, therefore, that 
the plaintiffs could, under the terms of their agreement, have sold 
the estates mortgaged without resorting to the Court. 

lu this view of the case, whilst I think that we must uphold 
the decision of the Lower Court in substance, I also think that 
both in this Court and in the Court below this is a case in which 
each party should bear his own costs. 



APPENDIX II. 



I have not separately discussed the law administered by the 
High Courts in this country in the exercise of their original 
jurisdiction. It is, however, in great measure, moulded on the 
practice of the English Coiirt of Chancery, of which I have en- 
deavoured to give a succinct account in these lectures. The 
High Court, however, is a Court both of law and equity, and is 
therefore in a position to deal with any question arising before 
it according to the true, as opposed to what I may call the 
artificial, relations between the parties. As to the mode in which 
mofussil mortgages are dealt with, see Macpherson's Mortgage, 
Chapter XI. The following cases also, as to the right of the 
mortgagee to sell the bare equity of redemption under a decree 
for money on the covenant, may be usefully consulted : Ramlochun 
Sircar v. Kamini Devya, 5 B. L. R., 460 ; S. C. on Appeal, 10 
B. L. R., 60 ; Brojonath Kundu Chowdhry v. Govindmony Dassee, 
4 B. L. R., 83 ; and Nerenjun Mookerjee v. Opendra Narain Dev, 
10 B. L. R., 57. 



I Js D E X. 

Accounts- 
liability of mortgagee in possession to account under Reg. XV of 1703, 237, 238 

meaning of ' gross receipts ' 238 

mortgagee not an assurer of continuation of previous rate of profit . 239 

mortgagee not competent to create middlemen 238,239 

nature of accounts -which mortgagee should keep 240 

mortgagee liable, in absence of explanation, for rents exhibited in rent roll 239 

verification by mortgagee 238 

when, by agent, good 241, 242 

when necessity for account arises L> 1 :2 

duty of Court if accounts are not produced 242 

presumption against mortgagee 212, 243 

interest not to exceed 12 per cent. 243 

Court will look to substance, and not to mere form, of agreement . 243 21' 
account of actual collections not excluded by zuripeshgee . . . 226 229 
liability of mortgagee in possession to account how far affected by repeal 

of Usury Laws 231 233, iMiJ-JI'.t 

possession by mortgagee as lessee at fixed rent 

agreement excluding account of actual collections, valid .... 232 

allowance for expenses of collection 2.'59 

practice of Indian Courts 

allowance for necessary repairs 24'.' 2">1 

improvements how far allowed . . -~<1. '-'"-' 

allowance for revenue or other payment made by mortgagee to prevent 

sale or forfeiture -'- 

occupation rent, mortgagee when chargeable with . . . .961 
mesne profits and usufruct, distinction between .... _'">'.' - 
liability of mortgagee to account for profits received by mortgagor after 

notice of subsequent incumbrance 

liability of mortgagee after assignment, without consent of mortgagor, 

in English law .... 
See REDEMPTION. 
Accretions to Security 



right of mortgagee to 



right of pawnee to 

Acknowledgment See LIMITATIONS. 

*T 



354 INDEX. 

Page. 

Agreement- 
thai on default mortgagee may sell land, void . . .92 97, upper 112 

aliter in case of pawnee selling pledge 307, 308 

that mortgagee in possession shall not account for rents, void under 
Reg. XV of 1793 227, 237 

Alienation 

by mortgagor of his rights, valid 187 

effect of clause against alienation 99 101,116,117 

by mortgagor cannot affect rights of mortgagee 187 

Allowances See ACCOUNTS. 

Bye-bil-waffa See CONDITIONAL SALE. 

Charge- 
deeds of further 333, 334 

Code Napoleon- 
provisions of, relating to destruction or deterioration of pledge ... 45 
does not permit private sale by pledgee 96 

Co-debtors See REDEMPTION, SUBROGATION. 

Collection- 
expenses allowed to mortgagee in account 239 

See ACCOUNTS. 

Condition See AGREEMENT. 

Conditional Sale- 
difference in form between mortgage by, and English mortgage . 134 136 

what constitutes mortgage by 134 

difference between, and sale with clause of repurchase . . . 136 139 

personal liability not presumed 140 

remedy of mortgagee in Bengal ordinarily confined to land . . .141 

Construction of Sudder Dewanny Adalut -ib. 

right to immediate possession in default 170 172 

See FORECLOSURE, SALE, REDEMPTION. 

Confusion of Security 

when property in pledge vests in pledgee 316 319 

rule of English and Roman law 316 319 

how far recognised by our Courts 318 

Consolidation of Securities 

when and against whom allowed 330, .331 

rule of English law 330 

partly recognised by our Courts 331 

Sec EXTINCTION OF SECURITY. 

Construction See CONDITIONAL SALE. SIM IT. K MOUTGAGE, USUFRUCTUARY 
MORTGAC.T-. 



INDEX. 355 

Page. 

Continental Law- 
hypothecation of moveables not permitted 17 

power of sale, void ib. 

mode of execution and distribution of sale proceeds among rival 
judgment-creditors (including mortgagees) Ill, 112 

Contribution 293, 294 

Decree See FORECLOSURE, REDEMPTION, SIMPLE MORTGAGE. 

Defence See PURCHASERS FOR VALUE. 

Deposit of Mortgage Debt 

time within which must be made 206 

must be unconditional 204 

must not be under protest 204 206 

See TENDER, YEAR OP GRACE. 

Deposit of Title-Deeds 

operates as mortgage 71 72 

' equitable mortgage ' meaning of, in English law .... 75 77 

usually accompanied by memorandum 78 

true nature of contract implied by 78 85 

Document See PAROL EVIDENCE. 

Dower See MAHOMEDAN LAW. 

English Law of Mortgage 1823 

Equitable Mortgage See DEPOSIT OP TITLE-DEEDS. 

Execution 

equity of redemption saleable in 1 87 

effect of sale by mortgagee 103 109 

waiver by mortgagee of his rights '. . .117 

mortgagee not bound to proceed against pledge ib. 

sale of property in, subject to mortgage 118 127 

sections 270 and 271 of Civil Procedure Code ib. 

what passes under sale by mortgagee 127 

section 259 of Act VIII of 1859 ib. 

See CONTINENTAL LAW, SIMPLE MORTGAGE. 

Extinction of Securities- 
consolidation 316 319 

renunciation 320 

sale by pledgee, or for land-revenue ib. 

prescription . 

satisfaction 319 > 32 

See MERGER, NOVATION, SUBROGATION. 

Foreclosure- 
summary proceedings towards, in Bengal 159170 



35G INDEX. 

Page. 
Foreclosure. (Continued.) 

can only take place after expiration of ' stipulated period ' . . 150 157 

preliminary demand 158 

Court in which application should be made ib. 

duty of Judge on receiving application ib, 

provisions of Statute mandatory, and not merely directory . . . 165 167 
proceedings under Reg. XVII of 1806 mandatory, and not merely 

directory , 165167 

regular suit for possession or declaration of title .... 168170 
practice of Courts not governed by Reg. XVII of 1806 . . . 172 174 

practice of English Court of Chancery 19, 20 

See DEPOSIT, LIMITATIONS, NOTICE OP FORECLOSURE, ROMAN LAW, YEAR OP 
GRACE. 

Further Advance See CHARGE, PRIORITY. 

Guardian 

when notice served on, is good 163 

High Court 

law of mortgage administered in exercise of original jurisdiction . App. I 

Hindu Law- 
early notions of pledge traceable in 28 34 

tradition originally essential to validity of pledge . . . . ./'/;. 

gradual relaxation of rule 31 

right of pledgee originally confined to bare right of detention . . ;{." :;7 
foreclosure and sale, right to, gradually recognised .... 37 40 

sale by judicial process 42 

classification of securities by Hindu lawyers 36 

priority of securities, rules regarding 42 44 

rights of pledgee, if pledge is accidentally destroyed 45 

no lien in, on assets of deceased debtor L'7i; 279 

maintenance of female members of family how far a charge on estate . 279 

Interest- 
higher than 12 per cent, not recoverable under Reg. XV of 179:? . . 225 

no limit as to, under Act XXVIII of 1855 2:>1.L > . 1 !2 

allowed on receipts by mortgagee after discharge of debt .... 254 
allowed on payments made by mortgagee for necessary repairs and 

similar outlay t 249 

See ACCOUNTS, HINDU LAW, MAHOMEDAN LAW. 

Judgment Creditor- 
possesses no lien before attachment 192 

when entitled to redeem /_ 

Jurisdiction Sec FORECLOSURE. REDEMPTION, SIMPLE MORTGAGE. 



INDEX. 357 

Kutkobala See CONDITIONAL SALE. 

Lease- 
mortgagee in possession under, not liable to account for actual collec- 

tions 232,233 

persons holding under beneficial, how far entitled to redeem . . 193 

See ZURIPESHGEE. 

Lien (considered as security arising by law). 

distinction between legal and judicial 265 

statutory, Reg. VIII of 1819, Act VIII of 1869, and Act XI of 1859 . 266268 
salvor's lien on account of payments made to prevent forfeiture . 268, 269 

of co-sharer for land-revenue paid by^him ib. 

vendor's, and how waived 270 271 

of purchaser for purchase money prematurely paid .... 273, 274 

of agents and partners 274 

of coparceners for necessary repairs . . . . . , . . ib. 
how far available against purchaser without notice .... 272, 273 
Possassory See PAWN. 
See HINDU AND MAHOMEDAN LAW. 
Judicial 
attachment before and after judgment ...... 279 282 

alienation by debtor not absolutely void 282 

effect of striking off attachment 283, 284 

Limitation 

period of, in suits by mortgagor against mortgagee for redemption . .211 

effect of written acknowledgment . 212 

acknowledgment when sufficient to enlarge statutory period . . 214217 

acknowledgment to third party 215 

effect of acknowledgment by one of several mortgagees .... 217 

difference between English Statute and Indian Act ib. 

period of, in suits by mortgagor for surplus profits (Act XIV of 1859 and 

Act IX of 1871) 259 

mortgagee not a trustee Ib. 

period of, in suits against purchasers without notice 212 

period of, in suits by mortgagee for possession of mortgaged property . 1 "."> 
time from which period runs (Act XIV of 1859 and Act IX of 1871) 175183 
permissive and adverse occupation by mortgagor ..... 176 
period of, in suits in Courts established by Royal Charter . . . 183 
period of, in suits for money secured on land 131. I '.'-'2 

Lis pendens 

not based on constructive notice 334 336 

application of rule 11" 



35$ INDEX. 

Page. 

Mahomedan Law- 
early notions of pledge how far traceable in 61 53 

' rahn ' denned 51 

possession originally essential to validity of pledge 53 

liability of pledgee for loss or destruction of pledge .... 54, 55 

gradual recognition of hypothecation 61 

power of sale 54 

taking of interest prohibited 57 

effect of prohibition on law of security ib. 

bye-bil-waffas, their history and gradual recognition .... 5860 

no distinction between pledges of land and goods 61 

no lien for dower in, nor in favor of creditors on assets of deceased Ma- 
homedan 275, 276 

Marshalling 

principle on which founded . 297 

rule of English law 297, 298 

recognised by our Courts 299 301 

in favor of purchasers and subsequent incumbrancers .... 298 
difference between position of purchaser and that of puisne incum- 
brancer 298, 299 

Mortgage- 
capacity to 87, 88 

different kinds of 63 

proper subjects of 87 

of property generally, void ib. 

contract of, may be verbal or in writing 64 

See DEED, FORECLOSURE, LEASE, HINDU LAW, MAHOMEDAN LAW, MORTGA- 
GOR, MORTGAGEE, REDEMPTION, REGISTRATION. 

Mortgagee- 
Sec CONDITIONAL SALE, SIMPLE MORTGAGE, USUFRUCTUARY MORTGAGE. 
in possession, liability of See ACCOUNTS. 

not a trustee within meaning of Limitation Act 259 

in possession, in what sense a trustee 249 

how far bound to repair 250, 251 

where not charged with deterioration 251 

what improvements allowed 251, 252 

allowances to See ACCOUNTS. 

security of, indivisible 194, 195 

effect of purchase by, of portion of mortgaged property . . . 196 202 

may not sell without judicial process !i:i 97 ; App. I 

power of sale in English law . 22 



INDEX. 

Mortgagee. ( Continued.') 

remedies of, and how far they be pursued concurrently . . . 21,173 

in possession, how far liable to pay land-revenue 252 

suffering estate to fall into arrear, and purchasing it, does not acquire 

irredeemable title , 9U 

rights of, not affected by partition or alienation by mortgagor . . 89 92 
rights of, extend to what represents original mortgage .... ib. 

when entitled to mesne profits 169 

See ACCOUNTS, REDEMPTION. 

Mortgagor 

not liable to account 1 87 

how far liable for voluntary waste 188 

may sell or mortgage equity of redemption 187 

rights of, liable to sale in execution ;/>. 

See CONDITIONAL SALE, SIMPLE MORTGAGE, USUFRUCTUARY MORTGAGE. 

Notice- 
under Indian Registration Act, immaterial 322 H2." 

doctrine of English law 323 

constructive See Lie PENDENS. 
See PURCHASER, NOTICE OF FORECLOSURE. 

Notice of Foreclosure 

what it is to contain 167 

must be accompanied by copy of application 105, 166 

must be signed by Judge 166. }>'>' 

what a good service of It;.", 

must, if practicable, be served personally ib. 

on whom service is necessary 1 58 1 64 

service of, on guardian of minor 163 

fresh, not necessary on alienees subsequent to application for foreclosure . !*'>( 
year of grace counts from date of service of 206 

Parol Agreement- 
mortgage by, valid 64 

Pawn, Pawnee, Pawnor :;<'-' -:ML' 

Pledge See MORTGAGE, PAWN. 

Possessory Liens . 312314 

Power of Sale- 
void in this country 9397 

rule of English law 

Priority 

generally determined by order of time . 

how affected by Registration Laws 



360 INDEX. 

Pagt. 

Priority. ( Continued.} 

effect of delivery of possession in Bombay 32f> 

rule of Hindu law ib. 

salvor's lien entitled to. irrespective of time 32") ,'!27 

mortgage to secure future advances 327 

/\'i-f fit lire of priority 

fraud, actual or constructive 332 

laches ib. 

allowing title-deeds to remain in custody of mortgagor . . 332, 333 

rule of English law followed in India ib. 

CHARGE, EXTINCTION OP SECURITY, WAIVER. 
Purchaser for value without Notice- 
defence of, when admitted by English Court of Chancery . 77, 78 

probable explanation of origin of doctrine 272. 273 

has no defence to suit founded upon real right . . . . . 121) i:!l 
Real- 
distinction between, and personal rights 29 

Redemption- 
equity of, origin and meaning of expression iN.Vh;', 

recognised by Indian Courts 188,189 

right of, vested in mortgagor and his representatives . . . 102. 103 

partial, not allowed 1 01 

one of several joint mortgagors may redeem whole ib. 

but only on payment of whole debt Ib. 

apparent exceptions to the rule 101 2<U 

decree for, must be unconditional 202. 2r,:> 

rule how far relaxed in recent cases 2(11 

Registration >'<> PRIORITY, NOTICE. 
Representatives of Mortgagor- 
purchaser of whole or portion of n : property . . . ir.s ir,-_> 

so also a second mortgagee or attaching creditor ib. 

lessee holding under beneficial lease (.') 103 

Roman law- 
short historical sketch of 7 13 

clarification of securitieH in i::. II 

influence of, on English law '_': 

.! TV. 

Security 

notions of 3 C) 

f 9 

Service 



INDEX. 

Simple Mortgage 

what constitutes 99 100 

covenant not to alienate how far a ,/, 

nature of security possessed by simple mortgagee . lol 

how made available ,7, 

decree for sale and money-decree, difference between 

.what passes under sale by mortgagee , 103, inj 

persons having interest In or charge on property subsequently acquired, 

not concluded by decree in their absence ... 103 

rights of such persons as against purchaser from mortgagee . . 101 108 

mortgagee by, not bound to proceed against pledge 117 

Court in which suit on, should be brought K>2, 133 

See EXECUTION, PURCHASER FOR VALUE. 

Subrogation- 
rule of English law ' 286 

recognised by our Courts 287, 288 

rights of surety and co-debtor 288 1.".)2 

purchaser of mortgagor's rights paying off incumbrance, how far entitled 

to benefit of security 292 

See CONFUSION OF SECURITY. 
other cases of subrogation 292. 293 

Supreme Court See HIGH COURT. 

Surety 

discharged by improper dealing with securities by principal creditor 289, 290 
See SUBROGATION. 

Tacking 

explanation of origin of doctrine in English law .... 329, 330 
not recognised in India .......... 330 

Usufructuary Mortgage 

what constitutes 218222 

rights of mortgagee by 222 

position of mortgagee since repeal of Usury Laws See ACCOUNTS. 

right of mortgagee on illegal eviction by mortgagor .... 22;?. 2'2i 

mortgagee must ordinarily look to land ~'2'2, 22" 

See ZURIPESHGEE, ACCOUNTS. 

Tender- 
must be unconditional 204 

Sue DEPOSIT. 

Title-Deeds See DEPOSIT OF , FORFEITURE OF PRIORITY. 

46 



362 INDEX. 

Page. 
Usury, Laws against See ACCOUNTS. 

their operation 221227 

Vacation See YEAB OP GRACE. 

Vivium Vadium 

a kind of usufructuary mortgage 219 

Warranty 

of title implied in mortgage 142 

Welch Mortgage 

a variety of usuf ructurry mortgage 219 

Year of Grace- 
mortgagor must redeem within one year from date of service of notice . 20ti 

practice of Allahabad Court ib. 

if expire on a holiday, a deposit on the first business-day is bad . . . '_M7 

Zur-i-peshgee Lease 

their origin and history 22o '227 

distinction between, and ordinary lease :.':'.:' 

not regarded as a separate transaction, but only as part of mortgage 

security '2-7 

redemption of, before fixed term 22l 

did not exclude account of actual collections* 227 L'20 

effect of repeal of Usury Laws on :.':;! -_':;:: 

may not be redeemed before expiration of term 

sufficient to exclude on basis of actual collections ..... ib. 
must not still be confounded with ordinary h . 24'J